FTC vs. Qualcomm–More than meets the eye in Ninth Circuit decision

The United States Court of Appeals for the Ninth Circuit (Ninth Circuit) gave a landmark decision in favor of Qualcomm, on Aug 11th 2020, in the long running antitrust case brought about by FTC. This was a highly anticipated outcome in the multi-year saga, which saw fortunes go back and forth between the parties. The detailed opinion written by Judge Callahan, representing the panel of three judges, is a tell-a-tale of how FTC mischaracterized Qualcomm’s business model, and how the United States District Court for the Northern District of California (lower court) misjudged the case. The ruling vacated all the decisions of the lower court, including the partial summary judgement. I spoke to Don Rosenberg, EVP, and General Counsel of Qualcomm, who of course was quite pleased with the outcome. He said, “we felt vindicated by the appeals court’s ruling and are looking forward to continue bringing path-breaking innovation like 5G to life.” 

Ninth Circuit’s decision was not just relevant for this case, but clarifies a whole slew of long-standing issues, and will set a defining precedent for IPR licensing in the future, especially from an antitrust point of view. 

Well expected outcome

The recent developments in the case had made me predict such ruling. The Ninth Circuit’s stay of the lower court’s decision, and the language used in that order, the tone of the in-person hearing, and the deep skepticism the panel showed in their questioning made it amply clear the direction the panel was tilting. 

The case indeed had a lot of unusual and rather interesting turn of events from beginning to end. It was filed in the last days of the last administration with only a few FTC commissioners in the office. One of those commissioners who was opposed to this move wrote a scathing opinion in The Wall Street Journal, publicly disparaging the case. The new incoming chair of FTC recused himself from the case, which left the case on autopilot with FTC staff taking charge. The instigators, major supporters and witnesses moved away from the case midway—Apple and Huawei settled their licensing disputes with Qualcomm, Intel exited the modem market. The US Department of Justice, which shares the antitrust responsibility with FTC, went strongly against FTC, it even became a party to the hearing and pleaded against the case. But the biggest surprise for me was the ferocity with which the Ninth Circuit tore down and reversed every decision of the lower court, including the summary judgement.