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Qualcomm, Apple Deal Leaves FTC Case to Set Antitrust Limits

April 17, 2019, 2:27 PM

Apple Inc.'s and Qualcomm Inc.'s decision to end all litigation between them now raises the stakes in the Federal Trade Commission’s suit against against the chip manufacturer.

A jury trial had started between the two companies April 15 in a federal court in San Diego but will no longer proceed since Apple agreed April 16 to give Qualcomm a one-time payment to settle a two-year dispute over patent royalty rates. Apple didn’t disclose the payment amount.

The next legal battle for Qualcomm is set to unfold in the U.S. District Court for the Northern District of California, which will decide if Qualcomm violated antitrust laws by forcing companies to pay steep patent royalty rates.

U.S. District Judge Lucy Koh’s opinion will play an even more critical role now that Apple and Qualcomm have settled, Eleanor Tyler, Bloomberg Law’s senior legal analyst, said.

“Every case that drops out makes her take on the issue more important,” she said.

Koh can now issue her opinion without fearing a clash with Qualcomm’s litigation with Apple , Thomas Cotter, professor at the University of Minnesota Law school, said. “The settlement now removes the possibility of conflicting opinions,” he said.

Judges are mindful of ongoing litigation in other courts and often pay close attention to rulings elsewhere. Opinions in other cases dealing with the same subject matter can sometimes influence a judge’s decision making. But for Koh, that calculation is off the table.

“Judge Koh’s decision will still matter, and will now not risk being inconsistent with the findings in San Diego,” Jorge Contreras, an intellectual property law professor at the University of Utah, told Bloomberg Law.

Factoring Risk

In complicated lawsuits, a jury can struggle to grasp key concepts and certain industry information. That can lead to a loss for a defendant, Cotter said. But in bench trials, judges decide the outcome, and Koh alone will decide the outcome of the Qualcomm-FTC dispute.

Qualcomm could settle with the commission, like they did with Apple, before Koh issues an opinion. But Qualcomm likely had more reason to settle with Apple since a jury trial is often riskier than a ruling from the bench, Cotter said.

“Parties are much more risk averse when dealing with a jury trial versus a bench trial,” he said.

Another factor possibly complicating Qualcomm’s efforts to reach a settlement is that the four FTC commissioners would need to approve such an agreement since Chairman Joseph Simons recused himself from the case.

A ruling is expected in the second quarter, according to Bloomberg Intelligence.

To contact the reporter on this story: Victoria Graham in Washington at vgraham@bloomberglaw.com

To contact the editors responsible for this story: Roger Yu at ryu@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com