Ninth Circuit Stays Qualcomm Antitrust Orders Pending Appeal

(AP Photo/Mark Schiefelbein, File)

SAN FRANCISCO (CN) – Going over the head of a federal judge, the Ninth Circuit on Friday granted Qualcomm a partial stay from carrying out the requirements of an antitrust judgment won by the Federal Trade Commission until an appeal is decided.

The stay comes after U.S. District Judge Lucy Koh denied Qualcomm’s request to delay implementation of a number of orders – including renegotiation of fee licenses between the chipmaker and both rivals and manufacturers – while it appealed. Koh had found Qualcomm’s “no license, no chips” policy, and the exorbitant fees it extracted from customers as a result of its threats to withhold needed computer chips, violated antitrust law.

On Friday, the Ninth Circuit granted Qualcomm a stay from provisions requiring it to make standard-essential patent (SEP) licenses available to competitors, prohibiting it from requiring chip sales as a condition of patent license and renegotiating all existing licenses following the terms set out by Koh.

“We are satisfied that Qualcomm has shown, at minimum, the presence of serious questions on the merits of the district court’s determination that Qualcomm has an antitrust duty to license its SEPs to rival chip suppliers,” the Ninth Circuit’s per curiam order stated. “Qualcomm likewise has made the requisite showing that its practice of charging OEMs [original equipment manufacturers] royalties for its patents on a per-handset basis does not violate the antitrust laws.”

The panel also found Qualcomm had demonstrated “a probability of irreparable harm” if forced to carry out Koh’s orders while waiting for the appeal to be heard.

“The injunction requires Qualcomm to enter new contractual relationships and renegotiate existing ones on a large scale,” the panel wrote “The fundamental business changes that the injunction imposes cannot be easily undone should Qualcomm prevail on appeal.”

Finally, the panel noted various factions of the government have doubts as to whether Koh’s orders are appropriate, with the Pentagon and Department of Energy saying they are a threat to national security and the Justice Department indicating the order may harm – rather than benefit – consumers in the long run.

“Whether the district court’s order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act, is a matter for another day,” the panel wrote. “For now, weighing all relevant factors, we conclude that the requested stay is warranted.”

The panel will hear the case on an expedited basis, and ordered its clerk to place it on the calendar for January 2020.

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