Qualcomm Oral Argument Pits FTC Against DOJ in 5G-Related Antitrust Case

SAN FRANCISCO -- Government and Qualcomm officials will argue Thursday in federal court in a case with implications for 5G technology, FTC antitrust authority and the tech industry (see 1910100017). Qualcomm said the FTC’s antitrust lawsuit threatens national security because of the impact on U.S. companies competing with China for 5G technology dominance. DOJ sided with Qualcomm, while rival Intel and automakers backed the commission (see 1912020029).

FTC Chairman Joe Simons and DOJ Antitrust Division Chief Makan Delrahim recused themselves from the intellectual property case because of ties to Qualcomm. Delrahim previously was a lobbyist for the company, and Simons previously was a partner at Paul Weiss, which represented Qualcomm (see 1811060021). The Obama administration’s FTC brought the case just before President Donald Trump took office in 2017, with Republican then-Commissioner Maureen Ohlhausen dissenting.

The FTC, DOJ and Qualcomm will argue for 20 minutes each before a three-judge panel of the 9th U.S. Circuit Court of Appeals of Consuelo Callahan, Stephen Murphy and Johnnie Rawlinson. Brian Fletcher, a former assistant to the solicitor general, will represent the FTC. Tom Goldstein of Goldstein & Russell will represent Qualcomm, and Deputy Attorney General Michael Murray will lead the Antitrust Division.

It’s “frustrating and disappointing” DOJ sided with Qualcomm in an attempt to undermine such an important antitrust case, said Sandeep Vaheesan, legal director for Open Markets Institute, in an interview. OMI's brief backed the FTC. DOJ’s argument that enforcement threatens U.S. interests against China in the race for 5G is irrelevant and outside the scope of reason, he said.

When U.S. District Judge Lucy Koh ruled in favor of the FTC in 2019 (see 1905220035), she “agreed with an antitrust complaint filed by a divided and depleted” FTC “in the waning days of the Obama Administration,” GOP FTC Commissioner Christine Wilson wrote in an opinion piece for The Wall Street Journal shortly after the decision. Koh’s ruling invites rivals to file private antitrust suits against companies that “decline to share their secret sauce -- whether it’s a patent, an algorithm or an actual sauce recipe -- with competitors,” she wrote. That's the ruling being appealed now.

Ohlhausen says she was “presented with no robust economic evidence of exclusion and anticompetitive effects, either as to the complaint’s core ‘taxation’ theory or to associated allegations like exclusive dealing.”

Qualcomm is appealing the ruling in favor of the FTC, which alleged violations of FTC Act Section 5 and Sherman Act Sections 1 and 2. The agency believes Qualcomm has monopoly power in two key chip markets. Ericsson and Samsung previously backed Qualcomm, with Samsung arguing contract and patent law are “better suited” for settling disputes about fair, reasonable and nondiscriminatory terms.