SAN, FRANCISCO/WASHINGTON – A federal judge on Wednesday ruled against Qualcomm Inc.’s effort to block the implementation of a sweeping antitrust ruling against it as the mobile chip supplier pursues an appeal that could take more than a year to wind through the courts.
The ruling was widely expected, but Qualcomm has argued in court that it could hamper critical negotiations with phone makers over 5G technology. Qualcomm did not immediately return a request for comment.
U.S. District Judge Lucy Koh did not give a specific reason for denying Qualcomm’s motion but she did strike from the record several pieces of evidence that Qualcomm had tried to use to make its case, including a slide deck from Qualcomm’s trial with Apple Inc. that alleged a coordinated effort inside the iPhone maker to harm Qualcomm financially. Government regulators had objected to including the slide deck, which would have become part of the official record for higher courts to review.
Qualcomm, which supplies modem chips to connect phones to wireless data networks, is fighting a May 21 decision by Koh in a case brought by the U.S. Federal Trade Commission. Among other things, Koh’s decision would drastically alter Qualcomm’s business model by forcing it to license its patents to rival chip makers instead of phone makers, which could potentially slice its patent royalties from several dollars per phone to pennies. Those patents generate most of Qualcomm’s profits.
Qualcomm on May 28 asked Koh to set aside her decision while it pursues an appeal. The company said that Koh’s decision would entail “radically restructuring its business relationships” in ways that would be impossible to reverse if it wins an appeal. It also argued that Koh’s ruling raised “serious legal questions” because, among other things, Koh blocked market evidence showing that Apple dropped Qualcomm in favor of rival chip supplier Intel Corp.
But earlier this month, smartphone maker LG Electronics Inc. opposed Qualcomm’s efforts to freeze the ruling. The phone maker said it is negotiating chip supply and patent license agreements with Qualcomm and could be forced into signing another unfair deal unless Koh’s protections remain in place. The FTC had also opposed Qualcomm’s move.
Qualcomm has signaled its intention to file an appeal but has not yet filed one or fully revealed its legal arguments. Koh’s ruling on Wednesday only concerns whether the ruling’s provisions will be put on hold temporarily as any appeal plays out. However, analyst expect many phone makers to be negotiating critical 5G contracts with Qualcomm while the appeal runs its course.