Brief of Amicus Curiae Professor Jorge L. Contreras In Support Of Appellee and Affirmance in FTC v. Qualcomm

Abstract

Qualcomm participated in the development of 3G and 4G wireless telecommunication standards under the auspices of two SDOs, the Telecommunications Industry Association (“TIA”) and the Alliance for Telecommunications Industry Solutions (“ATIS”). Each of these SDOs had adopted intellectual property rights policies (IPR Policies) that required their participants to grant licenses of SEPs to implementers of their standards on FRAND terms. Yet, over the course of several years, Qualcomm refused to license its SEPs to numerous actual and potential modem chip rivals including MediaTek, Project Dragonfly (a joint venture of NTT DoCoMo, Samsung and several Japanese manufacturers), Samsung, VIA Telecom, Intel, HiSilicon (a subsidiary of Huawei), Broadcom, Texas Instruments, and LGE. The district court also found that when Qualcomm did license its SEPs to smartphone vendors, its royalty rates were “unreasonably high.” Accordingly, the district court found that Qualcomm violated its FRAND commitments to ATIS and TIA, as well as Sections 1 and 2 of the Sherman Act, and Section 5 of the FTC Act. As a remedy, the district court entered an injunction that, inter alia, required Qualcomm to license its SEPs on FRAND terms to rival chip makers, and to renegotiate its existing SEP licenses to reflect reasonable royalty rates. Qualcomm now appeals. This brief seeks to draw to the Court’s attention historical, practical and policy matters pertaining to technical standardization that bear on the arguments made on appeal by Qualcomm and its federal agency amici curiae. In particular, this brief argues that: (1) the district court was correct to conclude that Qualcomm is required to license its SEPs to all applicants on FRAND terms, (2) the “reasonable” royalty level required by Qualcomm’s commitments to the relevant SDOs should not be measured by Qualcomm’s own royalties charged to others, and (3) enforcement of the district court’s injunction against Qualcomm will not threaten U.S. national security, and the arguments made to that effect mischaracterize or misunderstand the nature of both patent law and standards. Qualcomm has undeniably played a significant role in the development of wireless telecommunications technology. However, the antitrust laws must be enforced rigorously and even-handedly to eliminate anticompetitive conduct. An enterprise that has engaged in anticompetitive conduct should not be excused simply because it contributes to the national economy or to national infrastructure or defense. Giving Qualcomm special treatment in this case would open the door to such arguments in practically every antitrust case involving major industrial or technology players. And, as such, the force of the antitrust laws would be severely weakened to the detriment of American competition and consumers. Accordingly, this brief urges the Court to affirm the decision and order of the district court.