U.S. FTC moves for rehearing of Qualcomm antitrust defeat

FILE PHOTO: A Qualcomm sign is shown outside one of the company's many buildings in San Diego, California, U.S., September 17, 2020. REUTERS/Mike Blake

(Reuters) - The U.S. Federal Trade Commission on Friday filed a motion to rehear an antitrust lawsuit it lost on appeal against chip firm Qualcomm Inc.

The regulator asked the U.S. Ninth Circuit Court of Appeals for an “en banc” hearing before an 11-judge panel. Last month, a three-judge panel at the appeals court reversed a lower court decision against the San Diego-based company, the largest supplier of chips for mobile phones and a major source of wireless communications technology for 5G networks.

The U.S. Ninth Circuit Court of Appeals also vacated an injunction that would have required Qualcomm to change its intellectual property licensing practices. In addition to chips, Qualcomm owns industry-standard wireless technology and requires all smartphone makers to license those patents.

The company does not sell chips to companies that do not hold a license to a package of those patents and others, but at trial evidence emerged that Qualcomm would lower the patent fees for customers that bought its chips.

The lower court ruled that those practices amounted to an anticompetitive surcharge on rival chips. The three-judge panel of the appeals court disagreed, saying that because those practices were founded in patent law and applied neutrally to all players they could not harm Qualcomm’s chip rivals.

The FTC on Friday argued that ruling was a legal error.

“The panel’s errors have cast doubt on fundamental matters of antitrust principle and will encourage monopolists to cloak anticompetitive practices beneath false invocations of patent law and the appearance of neutrality,” the FTC wrote in its filing.

Qualcomm did not immediately respond to a request for comment. Qualcomm shares were up 2.4% at $114.83 on Friday afternoon, after the news.

Reporting by Stephen Nellis in San Francisco; Editing by Chizu Nomiyama and Matthew Lewis