Qualcomm miraculously wins the antitrust lawsuit, and the new judgment may be to maintain the U.S. 5g technology advantage

This victory is a big victory of the “chip + licensing” business model of Qualcomm. After the announcement of victory, the company’s share price soared more than 5% on the 11th, and the closing price narrowed to 2.3% to US $108.83. < / P > < p > the lawsuit can be traced back to January 2017, when the Federal Trade Commission filed an antitrust lawsuit against Qualcomm, accusing it of suppressing competitors. In May 2019, the California Court of the United States ruled in favor of FTC. Judge Gao lanhui ruled that the company charged “unreasonable license fees” to the mobile phone industry, hindering competition, and had to negotiate patent licensing fees with smart phone manufacturers in good faith. As a result of the court ruling, Qualcomm’s share price plummeted by nearly 11% on May 22, 2019, and its market value evaporated by $10.51 billion overnight. And if Qualcomm fails to overturn the ruling, it may face a huge fine from FTC. < / P > < p > the appeal lasted more than a year. The court of Appeals for the Ninth Circuit of the United States finally rejected the judgment of judge Gao lanhui of the Federal District Court last year with a unanimous vote of three votes, holding that the evidence provided by FTC can not prove that Qualcomm is suspected of illegal monopoly and hindering market competition. < / P > < p > the FTC’s director of competition, Connor, said the ruling was “disappointing and we will consider our options” or might seek review by the Supreme Court. However, Rosenberg, executive vice president and chief counsel of Qualcomm, said that the judgment of the Ninth Circuit Court of appeal completely overturned the previous judgment of the district court, and recognized our business model and patent licensing model, reflecting the great contribution of Qualcomm to the whole industry. < / P > < p > in its previous appeal, Qualcomm argued that the company acquired its current market dominance through a huge investment in R & D. Nearly 20% of its revenue is invested in technology research and development every year, which lays the basic technical standard for the mobile communication industry. The overall charging mode is also reasonable, because every mobile phone actually benefits from the technological innovation of Qualcomm. The Ninth Circuit Court of appeal accepted this claim. < / P > < p > for a long time, the mode of patent authorization has been controversial. On the one hand, Qualcomm’s patent fees come from the manufacturers and customers who use its chips, and on the other hand, they charge licensing fees from other chip manufacturers who use its patented technology to produce chips. There is no obvious difference between the way of charging and other patent companies, but in the way of collecting patent fees from manufacturers, Qualcomm appears to be very strong: it adopts the whole machine charging method. In other words, Qualcomm does not charge chip manufacturers licensing fees, but charges these fees to their customers. < / P > < p > in terms of fee structure, the patent licensing fee charged by Qualcomm includes two parts: fixed license fee and patent license fee. < / P > < p > for a fixed license fee, it usually ranges from several hundred thousand to one million dollars. Depending on the size of the enterprise’s shipment, the license fee for a large enterprise can be as high as one hundred million dollars. Huawei and Qualcomm reached an agreement to pay a patent license fee of $150 million per quarter in 2019. The patent license fee is charged according to a certain proportion of the net sales price of the licensed products. In China, according to the agreement reached between China’s national development and Reform Commission and Qualcomm in 2018, 2.275% of the patent fee will be charged for the use of Qualcomm’s standard necessary patents and only supports 5g mobile phones; 3.25% of the patent fees will be charged for mobile phones that use the necessary patents of Qualcomm standards and support 3G / 4G / 5G. In addition, the upper sales price limit of 5g license fee for smart phones is $400. Take smart phones as an example. According to this agreement, if the net price of a multi-mode 5g mobile phone is 5000 yuan, the mobile phone manufacturer will have to pay a patent license fee of $400 * 3.25% = 13 U.S. dollars, about 90.3 yuan, to Qualcomm for each such mobile phone. < p > < p > as early as 1989, Qualcomm officially licensed CDMA technology to some wireless communication enterprises, and registered and mastered a large number of CDMA technology patents. According to incomplete statistics, the company currently has more than 13000 patents, which are mainly distributed in the core fields of 3G and 4G, of which more than 3900 are CDMA patents, which is the foundation of Qualcomm and is expected to be the core support of 5g devices. In other words, no matter which mobile phone manufacturers use, most of them can’t get around to collecting patent fees from Qualcomm. < / P > < p > because of this strong royalty charging model, it is not the first time that Qualcomm has been accused of monopoly. It is also pointed out that the company has abused market domination, mainly in the following aspects: charging unfair high price patent license fees; tying up necessary patent licenses for non wireless standards; and attaching unreasonable conditions to baseband chip sales. So far, Qualcomm has been investigated and fined heavily in the EU, mainland China, Chinese mainland Taiwan, Korea and other countries and regions, with a total fine of nearly $4 billion. < / P > < p > in 2015, the Chinese government’s antitrust Department imposed an anti-monopoly fine of nearly one billion US dollars on Qualcomm, which forced it to adjust the level of patent fees of Chinese manufacturers, and then successively signed patent licensing agreements with a large number of Chinese mobile phone manufacturers. < / P > < p > in 2018, the European Commission imposed a huge fine of 1 billion euro on Qualcomm, which was also due to the abuse of its dominant position in the smartphone communication chip market. It is worth noting that the European Union’s fine is equivalent to 5% of the current year’s revenue of Qualcomm. In 2019, according to the Yonhap news agency, a Korean court ruled that the Regulatory Act of imposing a fine of 1.03 trillion won on Qualcomm for forcing an unequal contract was legal. < / P > < p > intelligent manufacturers also complain a lot about Qualcomm. The “no license, no chip” chip + licensing business model and tariff issues have been repeatedly challenged by the world’s major mobile phone manufacturers, so the company has also paid a huge litigation cost. < / P > < p > according to incomplete statistics, Nokia, Huawei, apple, Meizu and other mobile phones have filed patent lawsuits against Qualcomm, among which apple and Qualcomm once pointed out the most fierce patent conflicts. < / P > < p > the dispute between Qualcomm and apple began in January 2017, when Apple sued Qualcomm for alleged violations of competition law and charged excessive licensing fees under its existing licensing structure. Apple questioned the company’s search for a high license fee, and even proposed an alternative: instead of paying the license fee as a percentage of the selling price of a mobile phone, it is better to pay the license fee according to the percentage of the minimum saleable unit. The license agreement between the two companies expired at the end of 2016. Since then, apple and its suppliers have stopped paying any royalties to Qualcomm. The company sued apple for patent infringement. It even called for a ban on the iPhone, which uses Intel chips, to actively boycott apple. However, the monopoly complaints that have lasted for many years have not shaken the business model of Qualcomm. In addition to the monopoly litigation on the theme of country or region, which can make the company slightly adjust and hand over part of its profits as a fine, most patent lawsuits filed by companies end up with related companies paying the settlement fee, which is as powerful as apple, and finally in 2019 The patent conflict between the two sides was ended with a payment of 4.5 billion US dollars to Qualcomm. Huawei also recently paid $1.8 billion in patent fees from Qualcomm in exchange for technical cooperation between the two sides. < p > < p > with the accumulation of underlying scientific research and technology in the wireless communication industry, the strong ability to respond to lawsuits in the judicial system, and the profound industry accumulation, Qualcomm firmly holds its own voice in patent licensing. The huge profits brought by the licensing model also provide strong support for Qualcomm to further build a technological moat. < / P > < p > the U.S. Department of justice, which is responsible for antitrust affairs, publicly supported Qualcomm and called on the court to re-examine its patent licensing model, believing that the suppression of Qualcomm would directly affect the industry leadership of the United States in the era of 5g communication. < / P > < p > in addition, according to Sina Technology, the U.S. Department of justice also rejected Broadcom’s $120 billion acquisition of Qualcomm at the end of 2017 for the same reason. Although Broadcom had already registered as an American company at that time, which cleared the barriers of foreign investment review, the U.S. government believed that after Broadcom’s acquisition of Qualcomm, it could not guarantee that Qualcomm would continue to invest heavily in R & D, which would affect the industry voice of Qualcomm in the era of 5g communication and frustrate the technological competitiveness of the United States. < / P > < p > the change of the U.S. government also has an impact on the FTC case against Qualcomm. When it first sued Qualcomm, the FTC was a committee structure under the Obama administration. The trump government then took office to reorganize the FTC, but the newly appointed FTC chairman Simmons avoided the case of Qualcomm directly because of his previous work experience. The other four members are Republican and each has half, no decision to vote. As we all know, the trump government is extremely afraid of Huawei’s development in 5g field. < / P > < p > in this case, maintaining Qualcomm is also regarded as an option to maintain the 5g technology advantage of the United States. Considering the “politically correct” position of the US side, this patent licensing mode of Qualcomm will probably continue in the future. Cristiano Amun, President of Qualcomm, once said that the patent licensing mode and charging standards of the company in the 5g era are consistent with those in the 3G / 4G era, and the successful judgment of the federal court of appeal is also regarded as clearing the obstacles of patent licensing mode for Qualcomm. Continue ReadingXiaomi new machine real machine exposure center dig hole screen design or high color thousand yuan machine

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