In Melbourne Municipal Firefighters’ Pension Trust Fund v. Jacobs (Del. Ch. Aug. 1, 2016), the Delaware Court of Chancery clarified the pleading requisites for stating a Caremark claim. In so doing, the court granted the defendants’ motion to dismiss under Court of Chancery Rules 12(b)(6) and 23.1.

Plaintiff Melbourne Municipal Firefighters’ Pension Trust Fund is a retirement system providing pension benefits to retired municipal firefighters and is a stockholder of Qualcomm Inc. Qualcomm is a leader in the wireless telecommunications market and as such, it must license its products on fair, reasonable and nondiscriminatory terms. According to the plaintiff, however, Qualcomm engaged in anti-competitive and abusive business practices. Specifically, the plaintiff alleged that Qualcomm charged unreasonably high licensing fees, forced licensees to pay for unwanted products by bundling and tying patent licenses, demanded the licensees provide royalty-free licenses in return, and imposed unreasonable conditions on licensees and chip purchasers. Moreover, Qualcomm has been the subject of multiple investigations, including by the Korea Fair Trade Commission, (which found Qualcomm in violation of South Korean antitrust laws and imposed a $208 million fine) (the KFTC decision), the Japan Fair Trade Commission, (which found Qualcomm in violation of Japanese antitrust laws) (the JFTC order), and China’s National Development and Reform Commission (which found Qualcomm in violation of Chinese antitrust laws and agreed to a settlement with Qualcomm for payment of a $975 million fine). Additionally, in 2005, Qualcomm agreed to settle antitrust claims brought by Broadcom Corp. in federal court for $891 million paid over four years.

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