FTC’s Qualcomm Suit Faces Long Haul, Political Uncertainty

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By Alexei Alexis

The Federal Trade Commission’s antitrust lawsuit against Qualcomm Inc. has a long road ahead after a federal judge rejected a motion to dismiss it, making the outcome entirely dependent on President Donald Trump’s yet-to-be-named nominees.

The trial isn’t set to begin until January 2019. Patent and antitrust practitioners say that allows plenty of time for the appointment and confirmation of new FTC commissioners who might be inclined to side with Qualcomm and withdraw the complaint. Even if the case continues, they say, it may not be easy for the FTC to prove its allegations.

Several preliminary court proceedings aren’t scheduled until next year. “Qualcomm is obviously hoping the new commission gets rid of the case,” Robert Masters, a litigation partner in the Washington office of Fried, Frank, Harris, Shriver & Jacobson LLP, told Bloomberg BNA.

Acting FTC Chairman Maureen Ohlhausen opposes the suit, which is pending before the U.S. District Court for the Northern District of California. She voted against bringing it in the last administration as a Republican commissioner. But she’s stuck with it for now, since the only other sitting FTC commissioner is Democrat Terrell McSweeny, who supports the suit. A reversal would require a majority vote.

Stay Until Replaced

McSweeny’s term is set to expire in September. But commissioners are allowed to continue serving beyond their terms until there is a replacement. Given that three other seats are vacant on the FTC, she could be there for a long time. Six months into his administration, Trump has yet to announce any FTC appointments beyond making Ohlhausen acting chairman shortly after he was inaugurated.

The FTC says Qualcomm violated antitrust laws by refusing to license to competitors. One of Judge Lucy Koh’s key conclusions in allowing the case to go forward was that the FTC alleged sufficient facts to show that Qualcomm’s actions were motivated by “anticompetitive malice.”

Koh has outright denied only 8.6 percent of motions to dismiss in completed cases involving antitrust and trade violations, according to Bloomberg Law’s Litigation Analytics.

Masters said Koh’s order might mean she’s leaning toward forcing Qualcomm and other holders of “standard-essential patents” to negotiate with all parties, even direct competitors.

But her order alone won’t answer the key legal questions. “The court focused on whether the allegations were sufficient for the pleading stage,” he said. “The court did not make any substantive rulings that would provide any real clarity.”

Low Threshold

The judge’s order was a “no-brainer” win for the FTC, given that it’s an expert agency and the bar for keeping the case alive wasn’t high, according to Koren Wong-Ervin, director of George Mason University’s Global Antitrust Institute, a think tank that favors limited competition enforcement.

“I wouldn’t read too much into the judge’s order,” she told Bloomberg BNA. “It allows the case to go forward, but it doesn’t really say anything about the strength of the case.”

Qualcomm general counsel Don Rosenberg told Bloomberg BNA in an email that the company “respects” the court’s decision. But he noted that at this stage, “the court was required to accept all of the FTC’s factual allegations as true and construe the complaint in the light most favorable to the FTC.”

Going forward, the FTC will have the burden to prove its claims, which Qualcomm continues to believe are “without merit,” he said.

Qualcomm competitors Intel Corp. and Samsung Electronics Co. have urged the administration to continue the case.

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

For More Information

Bloomberg Law subscribers can access Litigation Analytics at http://src.bna.com/qLt

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