The U.S. 9th Circuit Court of Appeals has declined to reconsider an August ruling that Qualcomm’s business practices are legal under anti-monopoly laws — likely ending a three-year legal battle between federal regulators and the San Diego company.
The court on Wednesday denied a request by the U.S. Federal Trade Commission seeking a second look at a three-judge panel’s decision that threw out the FTC antitrust case.
The FTC petition for “en banc” reconsideration was based on alleged legal errors in the panel’s findings, which the agency argued “tears at the fabric of antitrust law.”
With an en banc review, a larger group of 9th Circuit judges rehears the case. The decision to grant a rehearing typically hinges on whether the case is of exceptional importance or creates a conflict with other rulings from different appeals courts, among other things.
In a short order on Wednesday, the court said all of its 20-plus judges were notified of the FTC request for a rehearing. None requested a vote on whether the three-judge panel’s decision should be reconsidered.
The FTC declined to comment. The agency could petition the U.S. Supreme Court to hear the case — though it’s unclear whether commissioners would support such a move.
Filed in the waning days of the Obama administration, the FTC’s case against Qualcomm was controversial. A sitting FTC commissioner at the time wrote that it was based on a flawed legal theory. The U.S. Justice Department, which shares antitrust enforcement authority with the FTC, sided with Qualcomm in the dispute.
In a statement, Qualcomm applauded the full 9th Circuits’ denial of the FTC’s petition for a rehearing, which leaves intact the panel’s unanimous decision to reverse and vacate a lower court’s anti-trust order against the company.
“The fact that not one judge on the 9th Circuit thought it necessary to consider the merits of the FTC’s petition or to even ask for a response from Qualcomm validates the strength and clarity of the panel’s thorough analysis and conclusions,” said Don Rosenberg, executive vice president and general counsel of Qualcomm.
The FTC alleged that Qualcomm’s “no license, no chips” policy allowed the company to leverage its market dominance in certain cellular processors to force smartphone makers to pay sky-high royalty fees to access its trove of wireless technology patents.
U.S. District Judge Lucy Koh found in favor of the FTC in May 2019 and ordered Qualcomm to renegotiate hundreds of patent licenses with mobile device makers. Patent fees fund a good portion of Qualcomm’s research efforts into next-generation mobile technologies such as 5G, so Koh’s ruling threatened to derail the company’s business model.
Qualcomm appealed to the 9th Circuit, where the panel threw out Koh’s decision. It found that the company’s business practices, while aggressive, were not anticompetitive. The panel added that disputes over patent fees were better handled through patent law or contract law, not anti-trust litigation, which if misapplied could stifle innovation.
Story by Mike Freeman
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