Statement of the FSA on the Decision of the United States Court of Appeals for the Ninth Circuit in FTC v. Qualcomm

Brussels September 7, 2020 – The Fair Standards Alliance (FSA) is disappointed with the August 11, 2020 decision of the United States Court of Appeals for the Ninth Circuit in FTC v. Qualcomm Inc.  The panel’s decision reversed the trial court’s judgment that Qualcomm’s conduct—including the refusal to license its cellular standard essential patents (SEPs) to its competitors and its “no license, no chips” policy—violated U.S. antitrust laws. The Federal Trade Commission (FTC) has not yet announced whether it would seek en banc review or certiorari of the Ninth Circuit’s decision, although the decision may meet the criteria for doing so.

The FSA believes this decision threatens to harm competition and innovation, not only in the modem chip markets, but more broadly, in the development of IoT and 5G products and services.  The loss in competition also creates security and supply chain vulnerabilities.  It creates distrust in technologies that can otherwise bring tremendous benefits to populations around the globe.  Indeed, the decision encourages business practices that are antithetical to competition and discourages innovation needed for 5G and other connected technologies that are important for competitiveness, and where national governments have expressed supply chain trustworthiness-related concerns.

Although the practical impact of the decision is likely to be significant, the decision stands on an unstable legal foundation and is limited in scope.  The decision only binds courts in one of the 13 U.S. circuit courts and is not required to be followed by the U.S. courts outside that circuit which have already reached, or may reach, a different conclusion.  Other tribunals – in the U.S. and internationally — that have looked at the same or similar issues have concluded that the conduct addressed in the decision violates the antitrust laws of their respective jurisdictions.   As discussed further below, the decision conflicts with well-established U.S. law and ignores the trial court’s detailed factual findings.