Amicus Brief of Law and Economics Scholars Supporting the Federal Trade Commission in FTC v Qualcomm

By Mark A. Lemley & A. Douglas Melamed (Stanford), Steven C. Salop (Georgetown University)

In reliance on Qualcomm’s FRAND promises, key SSOs incorporated its technologies into wireless standards. Qualcomm takes the position that its patented technologies are essential to those standards and, therefore, that any firm making or selling a standard-compliant product infringes its patents. As a result, the SSOs’ incorporation of Qualcomm’s patented technologies into wireless standards created a huge market for licenses to Qualcomm’s SEPs.

The district court held that Qualcomm used its chipset monopolies, not only to extract the high chip-set prices to which it was entitled, but also to perpetuate those monopolies by disadvantaging rival chip-makers and raising entry barriers. As a matter of law and economics, that holding is sound. At its core, this is yet another in a long line of cases dating back to the Supreme Court’s decision in Standard Oil of New Jersey v. United States and United States v. American Telephone & Telegraph Co. in which a monopolist violates the antitrust laws by using its market power to exclude rivals and entrench its monopoly.

We address Qualcomm’s exclusionary conduct in two Parts. Part I explains why Qualcomm’s no license, no chips policy is unlawful under well-established antitrust principles. Part II discusses Qualcomm’s refusal to license chip-set rivals, which reinforces the no license, no chips policy and violates the antitrust laws.

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