Blog: U.S. Gov’t Should Stay Out of the Qualcomm Case

Article By : George Leopold

Pressuring a federal judge undermines an independent judiciary and the rule of law.

The United States Department of Justice, whose mission is to enforce the law and administer justice (however elusive) is meddling in an antitrust case in which a federal judge struck down the core of dominant wireless chip maker Qualcomm’s business model.

The landmark ruling issued earlier this month by U.S. District Judge Lucy Koh prohibits Qualcomm from cutting exclusive licensing deals. Judge Koh also decided Qualcomm must make key modem chip IP available under license to its chip rivals. The ruling comes as the rollout of 5G wireless technology emerges as a national security cause célèbre for the Trump administration that has effectively blacklisted 5G first-mover and modem chip also-ran Huawei.

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“There is a sufficient likelihood that Qualcomm will hold monopoly power in the 5G modem chip market such that exclusive dealing agreements for the supply of modem chips could foreclose competition in that emerging market,” Judge Koh wrote.

The Justice Department inappropriately sought to sway Koh’s ruling when it undertook the unusual and highly political step of filing a “statement of interest” that constitutes another shot across the bow of an independent American judiciary. Judge Koh was essentially being pressured to think twice before ruling against Qualcomm, which few would dispute has a stranglehold in the 5G modem chip market.

Not even mighty Intel Corp. is willing to take on Qualcomm in the 5G silicon race, exiting the market as soon as Qualcomm settled a cellular patent dispute with Apple last month. (Judge Koh’s ruling invalidates that deal.)

There was a time in conservative economic theory when the government kept its paws off of emerging markets. In those days, the government dared not pick “winners and losers.” Just as what is left of the Republican Party in the Trump era no longer cares about federal budget deficits, the bedrock principle of not favoring one corporation or technology over another has gone the way of the dodo bird.

It is widely assumed DoJ will keep up the pressure on Judge Koh to go easy on Qualcomm, citing U.S. national security concerns as the Trump Administration continues to target 5G competitor Huawei. In so doing, it reinforces a troubling pattern by politicizing the administration of justice. Mark A. Lemley, a law professor at Stanford University, hardly a bastion of antitrust fervor, told our Rick Merritt: “This is a very surprising move by the DOJ. It is extremely rare for them to interfere in the Federal Trade Commission’s cases.”

Back in the 1990s, we interviewed Huawei officials at its sprawling headquarters in Shenzhen. At the time, there was growing suspicion that Huawei had pilfered key networking technologies from its U.S. partner Cisco Systems. During our interview, Huawei managers sized us up, sticking with strictly technical subjects and the marketing spiels they had just learned to master.

Finally, we asked about the Cisco allegations. Interview over!

Huawei’s unwillingness to even address the IP theft issue was telling. We had hit a raw nerve. As the Trump administration targets Huawei, one cannot help but think the country standing for free enterprise and unprecedented technological innovation is behaving in much the same way as those Huawei bosses.

Justice Department meddling in the Federal Trade Commission case against Qualcomm isn’t just troubling. It threatens to undermine the rule of law and the principle of an independent judiciary.

From an antitrust standpoint, FTC actions are often about changing corporate behavior. A decade ago, Intel wisely settled when the agency alleged anticompetitive behavior. The chip maker moved on and the processor market continued to thrive.

Qualcomm can appeal Judge Koh’s ruling, as it promises to do. Fine. That’s how our judicial system works. Meantime, the Justice Department should butt out and let justice takes its course.