Qualcomm’s aggressive licensing tactics had violated American antitrust law.

Qualcomm abused its position as a giant of the semiconductor industry to harm competition and overcharge cellphone makers, a federal judge has ruled, striking at the heart of the company’s business and sending shock waves through the smartphone industry.

In a scathing 233-page opinion [PDF] decision issued late Tuesday, Judge Lucy Koh of the Federal District Court in San Jose, Calif., found that Qualcomm’s patent-licensing practices violated antitrust law. The Federal Trade Commission sued Qualcomm in 2017, arguing that the company used its monopoly position as the supplier of two kinds of wireless chips to compel handset makers to pay “onerous” fees for the use of its patents.

“Qualcomm’s licensing practices have strangled competition” in the market for wireless modem chips for years, Judge Koh wrote in the public version of her ruling, parts of which were redacted to protect trade secrets.

The ruling was a resounding victory for the trade commission, which recently found itself at odds with the Justice Department over regulating wireless technology considered critical to national competitiveness and defense. About a month ago, Qualcomm reached a settlement with Apple in a parallel case involving many of the same issues, a deal that had seemed to ease the biggest potential threat that Qualcomm faced.

The ruling threatens Qualcomm’s unconventional business model, which has long affected the features and prices of most smartphones and has prompted antitrust scrutiny on three continents. As the largest maker of chips that provide communications capability to mobile phones, Qualcomm requires phone makers to pay patent royalties based on the price of each handset whether or not the companies use its chips. Unlike other semiconductor makers, Qualcomm makes most of its profit from patent fees rather than from its products.

Qualcomm said it will immediately ask Koh to put her decision on hold, and also seek a quick appeal to the federal appeals court in California.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” general counsel Don Rosenberg said in a statement.

Koh’s decision followed a 10-day non-jury trial in January, and is a victory for the U.S. Federal Trade Commission, which has accused Qualcomm in 2017 of violating antitrust law..

Qualcomm said it will immediately ask Koh to put her decision on hold, and also seek a quick appeal to the federal appeals court in California.

“We strongly disagree with the judge’s conclusions, her interpretation of the facts and her application of the law,” general counsel Don Rosenberg said in a statement.

Koh’s decision followed a 10-day non-jury trial in January, and is a victory for the U.S. Federal Trade Commission, which has accused Qualcomm in 2017 of violating antitrust law..

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