Judges Trim Edges Around Qualcomm Antitrust Suits
Separate rulings from judges in Northern and Southern California pare back peripheral claims but leave intact the crux of consumer antitrust suits and Apple Inc.'s patent licensing battle.
November 13, 2017 at 06:57 PM
4 minute read
U.S. District Judge Lucy Koh of the Northern District of California.
Qualcomm Inc. saw a measure of success last week in trying to block the patent and antitrust claims being waged against it in San Jose and San Diego federal courts.
In separate rulings, judges narrowed the claims asserted against Qualcomm by consumers and by Apple Inc. but preserved the heart of lawsuits that challenge the chipmaker's licensing practices.
U.S. District Judge Lucy Koh of San Jose rejected federal antitrust claims brought by a consumer class alleging that Qualcomm's practices unfairly inflated the price of iPhones. But Koh waved through consumer claims under California's Cartwright Act and said the class may bring those claims on behalf of consumers nationwide.
“The facts alleged demonstrate that Qualcomm's actions led to exclusivity and effectively shut Qualcomm's competitors out of the market,” Koh wrote in a 45-page opinion issued Friday, handing a win to class counsel at Susman Godfrey, Cotchett, Pitre & McCarthy and Hagens Berman Sobol Shapiro.
In San Diego, U.S. District Judge Gonzalo Curiel ruled that Apple and its contract manufacturers do not have declaratory judgment standing to attack the validity of nine patents that Qualcomm had merely included on a long list of its patents that it considers essential to practicing the 3G and 4G/LTE wireless standards.
“The law of declaratory judgment jurisdiction requires more specificity and more detailed infringement analysis than mere identification in a 1,975 page list,” Curiel wrote Wednesday.
Apple may still move forward with claims against nine other patents that Qualcomm had more explicitly asserted, Curiel ruled. Further, he dismissed much of Qualcomm's unfair competition counterclaim against Apple, which was based on Apple's alleged threat to move its chip business to Intel if Qualcomm publicly accused Apple of limiting its chips' performance.
“Qualcomm has not shown that Apple's conduct 'significantly threatens or harms competition,'” Curiel wrote. “If anything, Apple's actions have benefited competition by promoting the development of Intel as an alternative chip supplier.”
Last week's rulings pare back peripheral claims and counterclaims while leaving the core of Apple's and the consumer claims untouched. Last summer Koh rejected Qualcomm's motion to dismiss the Federal Trade Commission's antitrust claim, and Curiel turned back Qualcomm's bid for an injunction requiring the resumption of royalty payments during the litigation.
In this latest round, Qualcomm had argued to Koh that the consumers aren't participants in the chip modem market within the meaning of antitrust law. Koh disagreed, saying the consumers had alleged with sufficient specificity that Qualcomm's outsized royalties rippled through to consumers.
“Qualcomm's surcharge affects the ultimate price paid by consumers like plaintiffs because the cost of modem chips substantially influences the retail price that OEMs, retailers and distributors charge for a handset,” Koh wrote.
In San Diego, Curiel went through a checklist first developed by U.S. District Judge Edward Chen of San Francisco to determine declaratory judgment jurisdiction. Eliminating Apple's attack on the nine patents appeared to be a fairly easy call, but more difficult when it came to similar allegations raised by Apple's contract manufacturers, because they've stopped paying license fees to Qualcomm.
Ultimately, Curiel ruled that the nine patents would not make or break the litigation. “The court is not persuaded that a declaratory judgment as to only nine patents in a portfolio of thousands would affect this legal relationship,” he wrote.
As for unfair competition, Qualcomm was upset that Apple allegedly reduced download speeds on iPhones with Qualcomm chips to create parity with similar iPhones equipped with Intel chips and threatened retaliation if Qualcomm went public about it. Curiel ruled that Qualcomm had no standing to allege that Apple's actions were unfair. “Apple's alleged threats challenging Qualcomm's status as a supplier are justified by Apple's right to choose with whom it does business,” he wrote.
But Curiel ruled that Qualcomm may be able to prove statutory standing under Section 17204 of the UCL by demonstrating some “identifiable trifle” of injury.
Qualcomm is represented by Cravath, Swaine & Moore, Jones Day, Keker, Van Nest & Peters and Morgan, Lewis & Bockius. Apple is represented by Boies Schiller Flexner and Fish & Richardson. Apple's contract manufacturers are represented by Gibson, Dunn & Crutcher.
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