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Case No. 17-CV-00220-LHK FINDINGS OF FACT AND CONCLUSIONS OF LAW

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U n i t e d S t a t e s D i s t r i c t C o u r t N o r t h e r n D i s t r i c t o f C a l i f o r n i a

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION FEDERAL TRADE COMMISSION, Plaintiff, v. QUALCOMM INCORPORATED, Defendant. Case No. 17-CV-00220-LHK

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintif

f Federal Trade Commission (“FTC”)

brings suit against Defendant Qualcomm

Incorporated (“Qualcomm”)

for allegedly violating Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and seeks permanent injunctive relief. Specifically, the FTC claims that Qualcomm has harmed competition in two markets for baseband processors, also called modem chips, through a set of interrelated Qualcomm practices.

The FTC Act prohibits “[u]nfair methods of competition,”

which include violations of the Sherman Act. The FTC asserts

that Qualcomm’s conduct violates

(1) Section 1 of the Sherman Act, 15 U.S.C. § 1; (2) Section 2 of the Sherman Act, 15 U.S.C. § 2; and (3) Section 5 of the FTC Act, 15 U.S.C. § 45(a). ECF No. 966.

On April 3, 2017, Qualcomm moved to dismiss the FTC’s C

omplaint. ECF No. 69. On

June 26, 2017, the Court denied Qualcomm’s motion to dismiss. ECF No. 134.

Case 5:17-cv-00220-LHK Document 1490 Filed 05/21/19 Page 1 of 233

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On August 30, 2018, the FTC moved for partial summary judgment on the question of whether

Qualcomm’s commitments to two standard setting organizations (“SSOs”), the Alliance for Telecommunications Industry Solutions (“ATIS”) and the Telecommunications Industry Association (“TIA”),

require Qualcomm to license to other modem chip suppliers on fair, reasonable, and nondiscriminatory terms

Qualcomm’s patents

that are essential to practicing the ATIS and TIA standards

. ECF No. 792. On November 6, 2018, the Court granted the FTC’s

motion for partial summary judgment. ECF No. 931. The Court held a 10-day bench trial in this matter beginning on January 4, 2019. The parties gave closing arguments on January 29, 2019. Having considered the evidence and arguments of counsel, the relevant law, and the record in this case, the Court hereby enters the following findings of fact and conclusions of law.

I.

STIPULATED FACTS

The parties stipulated to the following facts: 1. Qualcomm is headquartered in San Diego, California. ECF No. 1326 at 1. 2. Since at least 1989, Qualcomm has been, and is now, a corporation.

Id.

3. Since at least 1989, Qualcomm has been, and is now, engaged in interstate and international commerce.

Id.

4.

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 pat

ents is called Qualcomm Technology Licensing (“QTL”).

Id.

5.

In 2012, Qualcomm created Qualcomm Technologies, Inc. (“QTI”), a wholly owned subsidiary of Qualcomm. QTI operates substantially all of Qualcomm’s products and

services business, including QC

T, as well as substantially all of Qualcomm’s engineering,

research, and development functions. Qualcomm continues to operate QTL.

Id.

6. Qualcomm CDMA Technologies Asia-

Pacific Pte. Ltd. (“QCTAP”), a Singapore

company, is a wholly owned indirect subsidiary of Qualcomm.

Id.

7. Cellular communications depend on widely distributed networks that implement


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cellular communications standards.

Id.

8. Some

original equipment manufacturers (“

OEMs

”)

have purchased multimode modem chips for use in Cellular Handsets intended for operation on the major U.S. wireless networks.

Id.

at 2. 9. Cellular Handsets are designed, marketed, and sold by OEMs such as Samsung, Huawei, Apple, Xiaomi, OPPO, VIVO, Google, Lenovo/Motorola Mobility, and LGE.

Id.

10. Consumers purchase Cellular Handsets for a variety of reasons, including for (a) their ability to transmit and receive data at high speeds over cellular networks, such as those implementing

Long Term Evolution (“

LTE

”)

, the highest-speed cellular standard which has widely commercialized to date, and (b) their ability to perform voice calls.

Id.

11.

The Third Generation Partnership Project (“3GPP”) and the Third Generation Partnership Project 2 (“3GPP2”) are global collaborative partnerships of standards

development/standards-

setting organizations (“SDOs” or “SSOs”)

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and other industry participants that develop technical specifications for cellular standards.

Id.

12.

The current “organizational partners” of 3GPP are seven regional SSOs,

specifically: the Euro

pean Telecommunications Standards Institute (“ETSI”), the Alliance for Telecommunications Industry Solutions (“ATIS”), the Association of Radio Industries and Businesses, Japan (“ARIB”), the Telecommunication Technology Committee, Japan (“TTC”), the

China

Communications Standards Association (“CCSA”), the Telecommunications Standards Development Society, India (“TSDSI”), and the Telecommunications Technology Association, Korea (“TTA”).

Id.

13. The current organizational partners of 3GPP2 are five regional SSOs, specifically:

the Telecommunications Industry Association (“TIA”), ARIB, TTC, CCSA, and TTA.

Id.

14.

Cellular communications standards have evolved over “generations,” including

second-

generation (“2G”), third

-

generation (“3G”), and fourth

-generat

ion (“4G”) standards.

Id.

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Consistent with the Court’s prior orders,

see

ECF No. 931 at 3 n.2, the Court refers to these standards organizations as SSOs.


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