Client Alert: In the Wake of Qualcomm: Antitrust Implications of Refusing to Cooperate with Competitors
On May 21, 2019, the Northern District Court of California delivered a lengthy rebuke to Qualcomm for its licensing practices. While Qualcomm is known as a leading supplier of cellular modem chips, the majority of its revenue comes not from the sales of the chips themselves, but from the patent royalty fees Qualcomm charges purchasers. To maximize royalty fees, Qualcomm employs an unconventional “no license, no chips” business model that conditions sales on entering into licensing agreements with Qualcomm. In a 233-page opinion, Judge Lucy H. Koh found that this practice violated Sections 1 and 2 of the Sherman Act.