By Brent Kendall and Asa Fitch 

A federal appeals court on Friday halted for now a ruling that found Qualcomm Inc. committed an array of antitrust violations, a boost for the chip maker that allows it to maintain its business practices for the near future.

The ruling is a setback for the Federal Trade Commission, which had sued the company.

The San Francisco-based Ninth U.S. Circuit Court of Appeals granted a request by Qualcomm to stay a decision by U.S. District Judge Lucy Koh that ordered major changes to how the company licenses its technology.

Judge Koh's ruling, issued in May, found the company leveraged its dominance in smartphone chips to force device manufacturers to pay unreasonably high royalty rates for Qualcomm's intellectual property.

Qualcomm argued its business practices were legitimate and perfectly lawful and said a stay was necessary because Judge Koh's ruling would impose harms on the company that couldn't be undone later on.

Qualcomm couldn't immediately be reached for comment.

Friday's court action isn't a final word on the merits of Qualcomm's appeal, though it suggests the company faces at least a fair prospect of winning.

The submission of written legal papers will continue through mid-November, with oral arguments at the Ninth Circuit to follow soon after. A ruling could take several more months -- or longer.

Friday's stay by the appeals court means Qualcomm won't have to change its practices while the litigation is ongoing.

The case dates back to January 2017, when antitrust officials at the FTC sued Qualcomm in the waning days of the Obama administration. The case has produced an unusual split between two federal antitrust agencies, with the Justice Department stepping into the case to support Qualcomm.

The FTC argued that staying Judge Koh's ruling would allow Qualcomm to perpetuate anticompetitive actions that have spurred higher prices and created roadblocks to innovation. The Justice Department said the judge's ruling could deal a blow to Qualcomm's position as a leader in 5G wireless technology, potentially to the detriment of national security.

As Qualcomm faced FTC scrutiny, Apple Inc. in 2017 also sued the chip maker on similar grounds, alleging it charged above-market rates for licenses to its patents. The Apple-Qualcomm legal battle grew to encompass cases in China, Germany and other far-flung locales. The companies in April reached a global settlement of their differences.

That deal wiped out a large amount of uncertainty hanging over the company, but a final decision against Qualcomm in the FTC case could still shake the company to its core.

Judge Koh's ruling required the company to renegotiate its licensing deals with phonemakers and offer chip-making competitors the option to use its intellectual property at reasonable rates.

Playing by those rules would likely make less lucrative a licensing business that accounts for almost two-thirds of Qualcomm's earnings before taxes as of its fiscal third quarter. In court testimony, Qualcomm executives have warned that some licensees were already threatening to hold back payments as the court battle dragged on.

Write to Brent Kendall at brent.kendall@wsj.com and Asa Fitch at asa.fitch@wsj.com

 

(END) Dow Jones Newswires

August 23, 2019 11:56 ET (15:56 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
QUALCOMM (NASDAQ:QCOM)
Graphique Historique de l'Action
De Fév 2024 à Mar 2024 Plus de graphiques de la Bourse QUALCOMM
QUALCOMM (NASDAQ:QCOM)
Graphique Historique de l'Action
De Mar 2023 à Mar 2024 Plus de graphiques de la Bourse QUALCOMM