Qualcomm Class Action Says Antitrust Activity Unfair to Consumers

A new Qualcomm antitrust class action lawsuit accuses the technology company of abusing its control of the market for cell phone components.

Sixteen individual plaintiffs say defendant Qualcomm Inc., which supplies components for cellular communication devices, has been engaging in anticompetitive activity that results in consumers paying unfairly inflated prices for cell phones.

According to this Qualcomm antitrust class action lawsuit, Qualcomm is the world’s foremost supplier of modem chipsets, also known as baseband processors.

These electronic components are essential parts of devices like mobile phones that use cellular communication technology.

Qualcomm is also one of several companies that collectively set industry standards to ensure compatibility among all devices within the cellular communications system. These standards require the use of specific technology, and the patent holders for that technology get to claim licensing fees and royalties associated with that use.

The standard-setting organizations, or SSOs, require companies to license this essential technology on terms that are fair, reasonable and nondiscriminatory – known in the trade as FRAND terms.

The plaintiffs say that Qualcomm developed the technology underlying a network standard known as the CDMA standard, on which carriers like Verizon and Sprint relied. At the same time, Qualcomm also holds the largest number of patents for CDMA technology, and the company is the dominant producer of CDMA chipsets.

Plaintiffs in this Qualcomm antitrust class action lawsuit say that Qualcomm failed to honor the FRAND terms it agreed to concerning its CDMA technology. Instead, plaintiffs say, Qualcomm has manipulated the standard-setting process to give it monopoly control over the modem chipset market.

They accuse the company of refusing to license its patents to competitors, threatening to withhold its supply of CDMA chipsets, swinging exclusive deals with particular cell phone makers, and shaking down other companies for exorbitant patent royalty payments in violation of applicable FRAND terms.

The cost of Qualcomm’s excessive royalty payments get passed on to consumers in the form of artificially and unfairly inflated prices for cell phones, the plaintiffs say.

Each plaintiff alleges they paid more for their cell phone than they should have, all because of Qualcomm’s alleged anti-competitive behavior. For example, for devices that are 3G compatible, Qualcomm charges up to a five percent royalty – accounting for $20 worth of the price of a $400 phone.

This Qualcomm antitrust class action lawsuit parallels a separate enforcement action brought on the same day by the Federal Trade Commission over essentially the same allegations.

According to an FTC press release, Qualcomm has been abusing its status as the world’s foremost supplier of baseband processors to impose unfair and unlawful supply and licensing terms on manufacturers of cell phones. The alleged Qualcomm antitrust activity violates the FTC Act, according to the agency.

Plaintiffs in the Qualcomm antitrust class action lawsuit are proposing to represent a Class that would encompass all persons in the U.S. who purchased or covered at least part of the purchase price for any of the CDMA-based cellular devices at issue at some time between Jan. 17, 2013 and the present.

They are asking for an award of damages, restitution and disgorgement of profits, plus court costs and attorneys’ fees, all with interest. They also seek an injunction permanently enjoining Qualcomm from continuing the alleged anti-competitive conduct described here.

The plaintiffs are represented by attorney Christopher S. Lebsock and other counsel from Hausfeld LLP, assisted by attorneys from Glancy Prongay & Murray LLP, Hach Rose Schirripa & Cheverie LLP, Bleichmar Fonti & Auld LLP, and the Law Office of Paul C. Whalen PC.

The Qualcomm Antitrust Class Action Lawsuit is Jordie Bornstein, et al. v. Qualcomm Inc., Case No. 5:17-cv-00234, in the U.S. District Court for the Northern District of California.

UPDATE February 23, 2017: Parties on both sides agree with Qualcomm’s request to consolidate at least 24 class action lawsuits into multidistrict litigation.

UPDATE 2: On July 19, 2018, plaintiffs in a Qualcomm antitrust class action lawsuit argued against the chipmaker’s push to require Apple to import iPhones under a proposed cease and desist order pending with the International Trade Commission.

UPDATE 3: On Aug. 9, 2018, Qualcomm fought a motion to certify a class action lawsuit initiated by consumers who say forced import behavior intentionally fixed the price of chipsets commonly used in cell phones. The chipmaker told the court that a Class of 250 million people is unprecedented and unfeasible.

UPDATE 4: On Aug. 29, 2018, a judge blocked a consumer antitrust class action lawsuit that attempted to stop Qualcomm from pursuing a patent infringement case against Apple which could force Apple to only import iPhones with Qualcomm’s chipsets.

UPDATE 5: On Sept. 27, 2018, a group of cellphone purchasers who filed a Qualcomm class action lawsuit have received certification from the court.

UPDATE 6: On Oct. 12, 2018, Qualcomm says that they should be able to appeal a California court’s decision to certify a proposed Class of 250 million individuals in a lawsuit alleging the company gouged consumers by hiking the price of a chip used in most cell phones.

UPDATE 7: On Jan. 23, 2019, consumers who purchased a cell phone since Feb. 11, 2011, may be affected by a Qualcomm antitrust class action lawsuit pending in federal court. A settlement has not been reached and no money is available at this time. However, this litigation is being dubbed “quite likely the biggest class action in history,” and may affect the rights of more than 250 million cell phone owners. Learn more here.

UPDATE 8: On Jan. 23, 2019, Qualcomm was granted an immediate appeal of a massive certified Class of cellphone owners involved in a class action lawsuit alleging the company overpriced chips ubiquitous in mobile devices. Qualcomm contends that the newly certified Class of about 250 million consumers is “simply too large and unwieldy to manage” in a petition to appeal the decision brought to the Ninth Circuit two-judge panel.