Qualcomm signage in front of Qualcomm's Sunnyvale, California campus located in the heart of Silicon Valley. Qualcomm signage in front of Qualcomm's Sunnyvale, California campus located in the heart of Silicon Valley. Photo: Shutterstock.

A federal appeals court has stayed the injunction U.S. District Judge Lucy Koh of the Northern District of California issued forcing Qualcomm to provide licenses to rival chip suppliers on FRAND terms and renegotiate licenses with smartphone makers without threatening to disrupt their supply of modem chips.

Qualcomm's legal team—an all-star team of lawyers at Goldstein & Russell; Cravath, Swaine & Moore; Keker, Van Nest & Peters; and Morgan, Lewis & Bockius—had argued that Koh's order would cause "the nation's leading innovator of cellular technology to fundamentally change the way it has done business for decades—a period in which the industry has flourished, competition has increased, prices have declined, and innovation has accelerated."

Friday morning, the Ninth Circuit granted Qualcomm's request for a temporary stay noting that the government's two chief antitrust enforcers—the Federal Trade Commission and Department of Justices's Antitrust Division—have split on the question of whether Qualcomm's licensing practices violated the antitrust laws.

"We are satisfied that Qualcomm has shown, at minimum, the presence of serious questions on the merits of the district court's determination that Qualcomm has an antitrust duty to license its [standard essential patents] to rival chip suppliers," wrote Judges A. Wallace Tashima, Milan Smith, and Mark Bennett of the U.S. Court of Appeals for the Ninth Circuit, in a per curiam decision.

"Whether the district court's order and injunction represent a trailblazing application of the antitrust laws, or instead an improper excursion beyond the outer limits of the Sherman Act, is a matter for another day," the panel continued, leaving the question of the merits to be argued in January 2020.

Don Rosenberg, executive vice president and general counsel for Qualcomm, said in a statement that the company was pleased and believes Koh's decision will be overturned once the Ninth Circuit considers the merits of the case. "The stay, which remains in effect through the course of the appeals process, keeps intact Qualcomm's patent-licensing practices," he said. "This will allow Qualcomm to continue to invest in inventing the fundamental technologies at the heart of mobile communications at this critical time of transition to 5G."

FTC Bureau of Competition Director Bruce Hoffman issued a statement saying that he was disappointed in the panel's decision, but looked forward to defending Koh's order on the merits. Hoffman noted that the Ninth Circuit's order left in place provisions of Koh's order barring Qualcomm from entering "express or de facto exclusive dealing agreements" for supplying modem chips or from interfering with customer communications with government agencies. The Ninth Circuit decision, he noted, left in place Koh's order that Qualcomm submit to compliance and monitoring procedures.

"These provisions promote competition in modem chip markets," Hoffman said. "The Bureau of Competition will monitor Qualcomm's conduct relating to the ongoing injunctive provisions, and we stand ready to evaluate any information from industry participants relating to whether Qualcomm is complying with its obligations."

Read the Per Curiam Order:

Read more:

FTC Fires Back at DOJ Over Qualcomm Competition

Koh's Qualcomm Antitrust Order Could Jeopardize Nuclear Security, DOJ Warns

Qualcomm Asks 9th Circuit to Stay Koh Injunction