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Trial that could force Qualcomm to change its business model has begun



As discussed by Reuters, a trial version that can change the way chip designer Qualcomm makes business kicked off on Friday with open statements from both the US Federal Trade Commission (FTC) and Qualcomm. The FTC sues the chip designer and claims that Qualcomm's current licensing policy is competition competition. The non-jury process is led by Judge Lucy Koh (who was behind the bench during the first Apple v. Samsung trial period) and will run for ten days.
If the government wins the trial period, Qualcomm could be forced to change the way it licenses its patents. Apple has a similar case waiting against Qualcomm, so it looks closely at this trial. Qualcomm asks phone manufacturers for a percentage of the retail price of any phone sold with a patented Qualcomm component or on-board software. Manufacturers say they should only pay a percentage of the cost of a component that uses a Qualcomm patented portion or software. In addition, manufacturers say that Qualcomm's patents are commonplace, meaning they are required by a manufacturer to build a product that meets industry standards. Licenses for such patents must be based on reasonable, affordable and non-discriminatory (FRAND) rates.
Under opening arguments, FTC lawyer Jennifer Milici said: "Qualcomm says you will pay our rates if you want our chips. Only way to get to market price [for Qualcomm’s patents] is to negotiate without that threat." In addition, FTC accused Qualcomm to pay Apple with discounts if the company promised to use only Qualcomm's iPhone modems. From 201
1-2016, Apple used Qualcomm's modem badges on iPhone exclusively. In 2017, it used such chips from both Qualcomm and Intel. In 2018, Apple and Qualcomm filed several packages against each other, Apple only purchased modem voltages for iPhone from Intel. Last year, Qualcomm was fined $ 1.2 billion by the EU Commission to pay Apple to use only the modem chips on the iPhone.

During the opening arguments yesterday, the lawyer representing Qualcomm, Bob Van Nest, attempted to point out that Qualcomm is not a dominant player in the fashion emblem market and should not be under such intense control. Using the two best smartphone manufacturers as examples, Van Nest at Huawei sources said 54% of the modem's chips internally, buying only 22% from Qualcomm and the rest from other chip providers. The lawyer added that Samsung internally produces 52% of the modem chips used on their phones, with 38% coming from Qualcomm, and the rest coming from other sources.


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