FTC Chief Steps Up Attack on Arguments Underlying Qualcomm Suit

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By Alexei Alexis

Antitrust enforcement agencies worldwide are missing the mark on patent licensing issues by condemning behaviors that don’t harm competition, Federal Trade Commission Acting Chairman Maureen Ohlhausen said in a new research paper released July 10.

The paper comes as Ohlhausen’s agency moves forward with a related lawsuit against Qualcomm Inc., which was filed during the previous administration over her dissent when she was a Republican commissioner.

“[I]t is a profound error to equate a negative market outcome with harm to competition,” Ohlhausen wrote. “Yet it is a mistake to which even an expert antitrust agency — the FTC — has fallen prey.”

Ohlhausen mostly avoided discussing the FTC’s Qualcomm case in the paper. But she forcefully argued against the use of antitrust laws to bring such patent-related actions.

An FTC spokeswoman didn’t respond to a request for comment about why Ohlhausen published the paper.

Complaint Continues

The FTC’s Qualcomm suit, filed in the U.S. District Court for the Northern District of California just days before President Donald Trump’s inauguration, accuses the company of violating antitrust laws by refusing to license to competitors and conditioning the supply of devices to cell-phone manufacturers on acceptance of its license terms. A judge has denied Qualcomm’s motion to dismiss.

For now, Ohlhausen can’t drop the complaint since the only other sitting commission member, Democrat Terrell McSweeny, helped bring the action with Edith Ramirez, former head of the agency under President Barack Obama. A commission majority is needed to support removal.

Critics, including Ohlhausen, say the Qualcomm suit will embolden other countries to deploy antitrust laws in a way that undermines the intellectual property rights of U.S. companies.

In her paper, Ohlhausen said that part of the problem at the FTC has been an aggressive and overly broad interpretation of Section 5 of the FTC Act, which prohibits “unfair methods of competition.” A 2015 commission statement intended to clarify the scope of the provision hasn’t helped, she said.

“Subsequent action by the commission in a complaint against Qualcomm shows that Chairwoman Ramirez’s view of the lack of limits in the statement was correct,” Ohlhausen wrote.

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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