A federal judge has denied a request from Qualcomm and the Federal Trade Commission to delay a key ruling in an anti-monopoly lawsuit so the two sides can work on a potential settlement.
The FTC and Qualcomm filed a joint motion Monday seeking 30 days before U.S. District Judge Lucy Koh in San Jose, Calif., makes a ruling on whether Qualcomm must license its standard essential patents to rival chipmakers.
Both sides said the delay would "facilitate the parties' ongoing discussions concerning the potential settlement of this litigation," according to court records.
Koh denied the request within minutes and without explanation, according to court filings. A hearing on whether Qualcomm is obligated to license rival chipmakers was scheduled for Thursday, but Koh announced last week that she would make a ruling without oral arguments.
It is unclear when Koh will release a decision. Qualcomm declined to comment.
In January 2017, the FTC sued Qualcomm over a violation of U.S. monopoly laws -- joining regulators in China, South Korea and Taiwan in challenging Qualcomm's patent-licensing business model.
The lawsuit contends that Qualcomm concocted a "no license, no chips" scheme that forces smartphone makers to overpay for licensing Qualcomm's core cellular patents.
Phone makers acquiesce to high licensing fees because they need Qualcomm's market-leading cellular modems, according to the FTC. Apple has made similar claims in a separate, ongoing legal fight.
Qualcomm, which argues that cellular connectivity breathes life into smartphones, licenses its standard essential patents to smartphone makers at a rate of 3.25 percent of the wholesale price of the phone -- up to a $400 cap.
That translates to a maximum patent royalty of $13 per phone.
While Qualcomm licenses its technology to smartphone makers, it does not license patents to rival chipmakers. The FTC contends that Qualcomm is legally bound to license cellular-modem competitors under its commitments to the U.S.' cellular-standard-setting organizations.
The FTC asked Koh to make a partial summary judgment in the lawsuit based on this argument, which could shift Qualcomm's cellular-patent licensing from the entire phone to individual components inside it.
Qualcomm counters that its patented cellular technology -- which enables more data to move faster over airwaves -- applies to myriad components inside a smartphone and network infrastructure, not just to the cellular modem.
In addition, the cellular industry has licensed patents at the device level for three decades. According to Qualcomm, no major holder of such patents has licensed at the component level.
Qualcomm also said the FTC is distorting the language in its agreements with standard-setting organizations about who it is required to license.
Three years ago, Chinese regulators examined Qualcomm's patent-licensing business. Although China fined the company $975 million for antitrust violations, it allowed Qualcomm's business model of collecting royalties based on the price of the smartphone to remain intact.
Business on 10/17/2018