Is The U.S. FTC Chairman Taking Qualcomm’s Side? (And Other Matters) – Qualcomm Inc. (NASDAQ:QCOM)

About a week ago, we discussed our opinion that Qualcomm’s (NASDAQ:QCOM) institution of a U.S. International Trade Commission (“U.S. ITC”) patent infringement action against Apple, Inc. (NASDAQ:AAPL) was a positive for the company as it built up leverage against AAPL, which has instituted a litigation against QCOM whereby it accuses it of engaging in “anticompetitive” tactics to maintain its monopoly over chips used in smart phones. Shortly after such article, more news came out that we see as an additional positive for QCOM and its shareholders (and a negative to QCOM’s competitors and those who believe in vigorous antitrust investigations and enforcement). In July 2017, the Acting Chairman of the U.S. FTC (Maureen Ohlhausen) stated in a new research paper that global antitrust agencies were condemning QCOM’s patent licensing behavior when she believed that such behavior did not harm competition. The publication of Chairman Ohlhausen’s paper arrives as the U.S. FTC pushes ahead with a QCOM-related lawsuit that was filed during the President Obama administration over her dissent when she was a Republican commissioner. In such research paper, she stated that “[I]t is a profound error to equate a negative market outcome with harm to competition.” In addition, she noted further that “Yet it is a mistake to which even an expert antitrust agency, the U.S. FTC, has fallen prey.”

While the Acting Chairman’s paper did not refer to the QCOM litigation in detail, such paper did contain a strong argument that antitrust laws should not be instituted in patent-related actions involving issues such as those in the QCOM litigation. We should point out first that the U.S. FTC filed its litigation against QCOM in the U.S. District Court for the Northern District of California days before President Trump became president. Readers may remember that the U.S. FTC, in its litigation against QCOM, alleges that QCOM has been violating antitrust laws by refusing to license to…

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