The ruling has significant ramifications for Qualcomm. The U.S. chipmaker has yet to disclose whether it will go on an appeal.
In what is likely to be a landmark ruling, a U.S. judged has ruled that Qualcomm Inc has unlawfully suppressed competition in the market for cellphone chips and used its dominant position to impose excessive licensing fees.
With the news reaching the market, Qualcomm’s shares were down by 13% in pre-market trade.
“Qualcomm’s licensing practices have strangled competition in the CDMA and the premium LTE modem chip markets for years, and harmed rivals, OEMs, and end consumers in the process,” ruled U.S. District Judge Lucy Koh.
Qualcomm’s operating segment relating to its chip and software business is called Qualcomm CDMA Technologies (QCT).
Qualcomm’s operating segment relating to the licensing of its patents is called Qualcomm Technology Licensing (QTL).
Koh’s ruling sides with that of the U.S. Federal Trade Commission (FTC).
In 2017, the FTC had filed a lawsuit against Qualcomm alleging that the company uses “anticompetitive” behavior to maintain an edge and a monopoly on a key semiconductor used in mobile phones.
In its lawsuit, the FTC had argued that the patents that Qualcomm sought to license are standard essential patents, which means that the industry uses them widely and they are supposed to be licensed on fair, reasonable and non-discriminatory terms.
FTC’s lawsuit also alleged that Qualcomm had refused to license some standard essential patents to rival chipmakers and of entering into an exclusive agreement with Apple Inc.
Qualcomm’s licensing practices have been the subject of government investigations in the U.S. since at least 2014; in Europe and in and in Asia its licensing practices have been under scrutiny for at least 2009, according to a court filing.
Qualcomm did not immediately respond to requests for comment.