FTC objects to Qualcomm’s submission of Apple documents in antitrust case

By Stephen Nellis

(Reuters) – The U.S. Federal Trade Commission on Thursday objected to mobile chip supplier Qualcomm Inc.’s decision to release internal Apple Inc. documents as part of its fight to halt enforcement of a May antitrust ruling.

Qualcomm filed a motion with U.S. District Judge Lucy Koh on Tuesday to challenge a sweeping ruling that would upend its business model pending appeal. In slides from internal Apple presentations, the iPhone maker outlined its goals of “creating leverage by building pressure” and “harming Qualcomm financially.”

The slides were part of an opening statement presentation in Qualcomm’s separate civil lawsuit against Apple in April, but they were never filed during Qualcomm’s earlier lawsuit with the FTC. If Koh accepts them, they will become part of the record that higher courts will review when Qualcomm ultimately appeals.

FTC officials on Thursday said the slides’ submission was “inappropriate, unfair, and prejudicial.”

The slides were part of Qualcomm’s opening arguments in the Apple lawsuit, in which the company outlined what its lawyers described as a targeted campaign by Apple to attack Qualcomm’s patent licensing model. In them, Apple discussed how to “devalue” the type of patents Qualcomm holds and “reduce Apple’s net royalties to Qualcomm.”

The FTC said there was no formal avenue for objection to the slides.

“If the document had survived a high-priority challenge, Apple’s witness would have been able to testify about, among other things, the context and purpose of the document and the meaning of the quoted language,” the FTC wrote on Thursday.

Qualcomm, which supplies chips for modems that connect phones to wireless data networks, is fighting to freeze Koh’s ruling, which could potentially reduce patent licensing fees from a few dollars per phone to a few cents.

Smartphone maker LG Electronics Inc. has opposed Qualcomm’s efforts to freeze the ruling. The phone maker said it is negotiating chip supply and patent licensing deals with Qualcomm and could be forced to sign another unfair deal if Koh’s protections are not upheld. The FTC also opposed Qualcomm’s move.

Qualcomm responded to LGE’s allegations on Tuesday by saying it had continued to supply chips to the Korean phone maker despite the fact that licensing negotiations had stalled and LGE had not had a license from Qualcomm at all earlier this year. That’s the kind of scenario that phone makers say could prompt Qualcomm to stop supplying chips if Koh’s ruling is not implemented.

(Reporting by Stephen Nellis in San Francisco; Editing by Leslie Adler and James Dalgleish)