Qualcomm Inc. shouldn’t expect a pretrial ruling from U.S. District Judge Gonzalo Curiel on the reasonableness of its licensing offer to Apple Inc. before Apple filed its 2017 antitrust suit.
At least, that was the impression Curiel gave at a hearing Friday as the second of three Qualcomm antitrust trials draws closer. But Curiel sounded determined to go forward with an April jury trial, despite “all of the moving parts” generated by the sprawling antitrust litigation in San Diego and by the Federal Trade Commission’s antitrust action against Qualcomm in San Jose.
Lawyers for Qualcomm, Apple and Apple’s contract manufacturers gathered in Curiel’s courtroom Friday with trial about 10 weeks off in San Diego, and as U.S. District Judge Lucy Koh nears the conclusion of a bench trial in the FTC case in San Jose. The FTC is seeking to enjoin Qualcomm from certain practices such as refusing to license its competitors and threatening to withhold cellphone modem chips from companies that balk at Qualcomm’s licensing terms, a policy dubbed “no license, no chips.”
Qualcomm, meanwhile, is asking Curiel to declare that Qualcomm made a fair, reasonable and non-discriminatory (FRAND) royalty offer to Apple before negotiations broke down at the end of 2016. Cravath, Swaine & Moore partner Richard Stark said such a ruling could establish that Apple is an unwilling licensee and pave the way for an injunction.
Apple wants Curiel to dismiss that claim, saying it’s irrelevant to the antitrust and breach-of-contract issues at the center of the case. Curiel sounded sympathetic to Apple.
“I’m having problems understanding how it is that this offer made by Qualcomm in 2016 would affect the jury’s determination about what was going on in 2013, 14, 15” with regard to “no-license, no chips” and the refusal to license competitors, Curiel said.
Fish & Richardson partner Ruffin Cordell argued for Apple that Qualcomm is trying to keep evidence of its negotiating tactics away from jurors while obtaining a judicial endorsement of its royalty rates. “They want to use it with other industry players,” he said.
Cordell argued that such a determination would require Curiel to make an individualized assessment of all of the declared standard-essential patents in Qualcomm’s portfolio. “These things aren’t weighed by the pound,” he said. But even if Curiel did make such a ruling, it would be advisory only because Apple hasn’t consented to be bound, Cordell said.
Those arguments seemed to resonate. “What is the utility of the court taking the time to make that determination at the end of the day?” Curiel asked Stark.
Stark said “a huge amount of proof” about the negotiations has been made available to Curiel as part of the litigation. The jury trial will at least implicitly determine whether Qualcomm satisfied its FRAND obligations. “We’re asking that that determination be made explicit,” he said.
Curiel sounded wary. He noted that Koh has already ruled that Qualcomm had a duty to license chipmaking rivals as part of its FRAND commitment. “It seems to me between this litigation and what has unfolded in front of Judge Koh that it could be impossible to make it as simple as yes, Qualcomm, what you offered is FRAND compliant,” Curiel said.
There’s no guarantee that Koh will issue findings of facts and conclusions of law before the San Diego trial gets underway. But Curiel didn’t sound interested in waiting. He told the parties he will expect them to submit their own proposed findings of fact and conclusions of law shortly after trial. “What I don’t want is to drag this on and the next thing you know we’re in the summer or fall,” he said.