Qualcomm Loses Round 1 in Legal Spat With Apple

SAN DIEGO (CN) – A federal judge dealt Qualcomm a major blow Friday by denying its request to block Apple from filing lawsuits internationally while the two tech giants battle stateside over cellphone chipset technology.

In a 34-page redacted order, U.S. District Judge Gonzalo Curiel ruled Apple should not be enjoined from pursuing international legal claims while its lawsuit against Qualcomm in the Southern District of California plays out.

Qualcomm sought the injunction based on its contention that because multiple foreign actions are part of a “single licensing dispute” already before federal court, the U.S. matter should be decided before additional claims can be litigated.

Apple sued Qualcomm for $1 billion in January on claims it is effectively “double-dipping” by charging for its technology used in smartphones and royalties on the technology as well.

The San Diego-based Qualcomm has already faced international investigations by the Korean Fair Trade Commission and a lawsuit by the Federal Trade Commission over using its monopoly power to make Apple use its chipsets exclusively in exchange for billions in rebates. The FTC action survived dismissal earlier this summer.

Apple has filed similar lawsuits against Qualcomm in the United Kingdom, Japan, China and Taiwan.

At last month’s injunction hearing before Curiel, Qualcomm’s attorneys argued Apple’s foreign claims will “evaporate” because they are based off the same claims and alleged anticompetitive behavior being challenged in San Diego’s federal court.

The dispute arises out of Apple’s claims that Qualcomm refuses to make chipset licenses used in iPhones and other popular devices available on a “fair, reasonable and non-discriminatory,” or FRAND, terms to licensees.

In his order, Curiel found Apple can pursue its anticompetitive claims internationally because unlike Qualcomm, it has not made binding commitments to the European Telecommunications Standards Institute – a standard-setting organization in the cellular communications industry – which would limit its ability to seek relief.

“Apple has made no binding commitment that limits where it can bring a lawsuit, under what laws, or how it can enforce its third-party beneficiary rights under ETSI. As a baseline matter, therefore, Apple is free to exercise its rights in the United Kingdom, China, Taiwan and Japan under those countries’ laws,” Curiel wrote.

Curiel also found any FRAND determination he makes would not be binding worldwide as Qualcomm claimed. Apple’s worldwide suits challenge Qualcomm’s foreign patents under foreign patent law and also Qualcomm’s licensing practices under foreign competition and antitrust laws. Those lawsuits are not “functionally similar” to the one he presides over, Curiel found.

He said Qualcomm’s contention that a FRAND determination in the United States would be enforceable worldwide “is lacking and otherwise unconvincing.”

Curiel also declined to find Apple’s foreign actions are vexatious or were filed to “annoy or harass” Qualcomm to gain leverage in future licensing negotiations

“Apple’s declarations make evident that it has sought to challenge Qualcomm’s patent licensing practices and anticompetitive conduct territory by territory. While Qualcomm may object to this litigation strategy as duplicative, the court will not conclude that Apple’s exercise of its rights under foreign laws is vexatious,” Curiel wrote.

The judge found Apple had a “legitimate reason” to pursue lawsuits in different countries since antitrust laws differ significantly in between jurisdictions. He added that “Qualcomm placed global relief on the table, not Apple” when it asked the judge to make a FRAND determination which would be enforceable worldwide.

Curiel also dismissed Qualcomm’s argument it would be “unfair” to alter its business practices on a case-by-case basis, finding that’s already happened after China slapped the tech giant with a $1 billion fine following an investigation into chipset licensing and its effect on the Chinese market.

He pointed out the “global public concern” about Qualcomm’s alleged anticompetitive behavior is highlighted by the international investigations into its business practices. For that reason, Curiel found international businesses that deal with Qualcomm should be able to seek relief in their own jurisdictions, under their own laws.

“To issue an anti-suit injunction, therefore, would directly impede upon the ongoing efforts in the U.K., China, Japan, and Taiwan to assess the anticompetitive effects of Qualcomm’s licensing and chip practices on their markets,” Curiel wrote.

A hearing on a motion to dismiss Qualcomm’s counterclaims against Apple is scheduled for Oct. 4.

 

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