Stromberg v. Qualcomm Inc.
| Decision Date | 29 September 2021 |
| Docket Number | No. 19-15159,19-15159 |
| Citation | 14 F.4th 1059 |
| Parties | Karen STROMBERG; Samuel Roecker; Thomas Lammel; Mary Galloway; Danielle Lagrave; Thomas McMahon; Boardsports School LLC; Patrick Benad; Lindsey Carr; Renee Acosta; Patricia Burness; Carol Harris; Robert Links; Nichelle Lyons; Nuala Vignoles; Rachel L. Miller; John William Kiefer III; Matthew Mitchell; Susan Gonzalez-Pender; Terese Russell; Sarah Key; Dalia Zatlin; Beth Crandall; Clarissa Simon; Kendall Martin ; Rodrigo Sapla; Rebecca Davis; Thomas McManus; Kimberly Scavone; Melissa Ju; Chris Thompson; Martha Countess; Karen Hood; Jaime Martin ; Adrian Esteban; Jeffrey Davis ; Ericsson Broadbent; Paul Scott Ervin; Caralyn Tada; Nagore Miles; Bethany Rising; Jiying Spencer; Dayan Crutcher; Catherine Schmidlin; Allison Tripp; Lindsay Smith; Katie Smith; Kirsten Luenz; Laurel Vener; Stephen Judge ; Seth Salenger; Scott Hansen; Joseph Kovacevich; Michelle Reynolds; George Marut; Janet Ackerman; Alan Schlaikjer; Lori Landes; Joyce Grantz; Gabrielle Kurdt; John Solak; Todd Espinosa; Andrew Westley; Laura Hallahan; Mary C. McDevitt; Padraic J. Brennan; Jason Schwartz; Suzanne Block; Kevin Calero; Carlo Endozo Caringal; Ian Carson; Andre Cruz; Lucas Rangel Ferreira; Masood Javaherian; David Koplovitz; Brian Letulle; Deirdre McElhaney; Carmen Minon; Erica Minon; Gabriel Minon; Betsy Santiago; Javier Santiago; Peter Yee ; Alicia Hadnett; Daniel Carroll; Debra Grasl; Amanda Newsome; David Kreuzer; Armando Herrera; Eden Wagner; Neil Wagner; Allan Rotman; Shari Cole; Phillip James Zacharias; Mary Beth Cummins; Guy Snowdy; Cynthia Bambini; Grant Hauschild; David Floyd; Kim Coughlin; Brandon Fuller ; Lisa Patnode; Nina Bartoshevich; Leonidas Miras; James Clark, Plaintiffs-Appellees, and Jordie Bornstein; Cordt Byrne; Elliot Carter; Jeff Ciotti; Dwight Dickerson; Matthew Christianson; Logan Griesemer; Ryan Hart; William Horton; Steve Krug; Gail Margolis; Kate Mortensen; Alyssa Nee; Christopher Whalen ; Stephan Farid Wozniak; Christopher Zayas-Bazan; David Carney; Julie Ewald; Tom Parkin; Brian Depperschmidt; Brandon Steele; Kyle Weber; Craig Housenick; Ryan Margulis; Richard Rizzo; Guy Dietrich; Jeffrey M. Kurzon; Susan Nagy; Nicolas Yousif; Scott Frederick; Charles Poon; Andrea Hogan ; Tina Heim ; Monica Morrow ; Mark Cardillo; Allison Shipp; Michelle Mackay; Colleen Sparke; Janet Silverness; Melanie Barclay; Tiffany Ringo; Hallie Lingo; Crystal Hohenthaner; Daniel K. Brendtro ; Daniel Delier; Paul Nelson; Catherine Kaderavek; Karen Carlet; David Waring ; Leon Theodore Lipka III, Plaintiffs, v. QUALCOMM INCORPORATED, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert A. Van Nest (argued), Eugene M. Paige, Steven A. Hirsch, Cody S. Harris, and Justina Sessions, Keker Van Nest & Peters LLP, San Francisco, California; Gary A. Bornstein and Yonatan Even, Cravath Swaine & Moore LLP, New York, New York; Richard S. Taffet, Morgan Lewis & Bockius LLP, New York, New York; Willard K. Tom, Morgan Lewis & Bockius LLP, Washington, D.C.; Geoffrey T. Holtz, Morgan Lewis & Bockius LLP, San Francisco, California; for Defendant-Appellant.
Kalpana Srinivasan (argued), Susman Godfrey LLP, Los Angeles, California; Joseph W. Cotchett (argued), Michael A. Montaño (argued), Adam Zapala, and Tamarah Prevost, Cotchett Pitre & McCarthy LLP, Burlingame, California; Marc M. Seltzer (argued), Steven G. Sklaver, Amanda Bonn, Oleg Elkhunovich, Krysta Kauble Pachman, and Lora Krsulich, Susman Godfrey LLP, Los Angeles, California; Joseph Grinstein, Susman Godfrey LLP, Houston, Texas; Katherine M. Peaslee, Susman Godfrey LLP, Seattle, Washington; Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, Washington; Jeffrey D. Friedman and Rio S. Pierce, Hagens Berman Sobol Shapiro LLP, Oakland, California; for Plaintiffs-Appellees.
Mary Helen Wimberly (argued) and Kristen C. Limarzi, Attorneys; William J. Rinner, Chief of Staff and Senior Counsel; Michael F. Murray, Deputy Assistant Attorney General; Andrew C. Finch, Principal Deputy Assistant Attorney General; Makan Delrahim, Assistant Attorney General; Antitrust Division, United States Department of Justice, Washington, D.C.; Jeff Landry, Attorney General; Elizabeth Baker Murrill, Solicitor General; Louisiana Department of Justice, Baton Rouge, Louisiana; Dave Yost, Attorney General; Benjamin M. Flowers, State Solicitor; Office of the Attorney General, Columbus, Ohio; Ken Paxton, Attorney General; Kyle Hawkins, Solicitor General; Office of the Attorney General, Austin, Texas; for Amici Curiae United States of America and States of Louisiana, Ohio, and Texas.
Kevin G. Clarkson, Attorney General, Office of the Attorney General, Anchorage, Alaska; Eric Schmitt, Attorney General, Office of the Attorney General, Jefferson City, Missouri; for Amici Curiae States of Alaska and Missouri.
Ashley C. Parrish and Joshua N. Mitchell, King & Spalding LLP, Washington, D.C.; Steven P. Lehotsky and Jonathan D. Urick, U.S. Chamber Litigation Center, Washington, D.C.; for Amicus Curiae Chamber of Commerce of the United States of America.
Richard A. Samp and Cory L. Andrews, Washington Legal Foundation, Washington, D.C., for Amicus Curiae Washington Legal Foundation.
Randy M. Stutz, American Antitrust Institute, Washington, D.C., for Amicus Curiae American Antitrust Institute.
Steven N. Williams, Joseph Saveri Law Firm Inc., San Francisco, California, for Amici Curiae Choice of Law Professors.
Scott Martin, Hausfeld LLP, New York, New York, for Amici Curiae Economists and Professors.
Leslie A. Brueckner and Stephanie K. Glaberson, Public Justice P.C., Oakland, California; Jefffrey R. White and Amy L. Brogioli, American Association for Justice, Washington, D.C.; Richard A. Koffman, Emmy L. Levens, and Bo Uuganbayar, Cohen Milstein Sellers & Toll PLLC, Washington, D.C.; Sandeep Vaheesan, Open Markets Institute, Oakland Park, Florida; for Amici Curiae Public Justice P.C., American Association for Justice, and Open Markets Institute.
Before: Eugene E. Siler* , Jay S. Bybee, and Ryan D. Nelson, Circuit Judges.
Qualcomm Incorporated seeks interlocutory review of the district court's order certifying a nationwide class of up to 250 million class members in an antitrust multi-district litigation raising claims under the Sherman Act and California state law. Because the district court erred in its choice of law analysis and in light of FTC v. Qualcomm Inc. , 969 F.3d 974 (9th Cir. 2020), we vacate the class certification order. On remand, the district court should reconsider the viability of Plaintiffs’ claims given FTC v. Qualcomm .
With its principal place of business in California, Qualcomm is a global leader in cellular technology. Over the years, Qualcomm has contributed notable technological innovations to modern cellular communication standards and holds thousands of cellular patents.
Some of Qualcomm's patents are standard essential patents ("SEPs") covering technology that international standard-setting organizations ("SSOs") incorporated into cellular communication standards, such as 3G CDMA or 4G LTE. SSOs "are global collaborations of industry participants that establish technical specifications to ensure that products from different manufacturers are compatible with each other." FTC v. Qualcomm , 969 F.3d at 982–83 (internal quotation marks and citations omitted). Manufacturers and suppliers must use technology covered in Qualcomm's SEPs if they want to practice 3G CDMA or 4G LTE standards. Thus, a manufacturer or supplier wanting to comply with 3G CDMA or 4G LTE standards will infringe on Qualcomm's SEPs unless they license those SEPs.
Before incorporating patented technology into a standard, SSOs require that patent holders commit to license their SEPs on fair, reasonable, and non-discriminatory ("FRAND") terms. FRAND commitments safeguard against abuses like "patent holdup," through which a SEP holder demands excessive royalties from suppliers and manufacturers of standard-compliant products and services. See Microsoft Corp. v. Motorola, Inc. , 696 F.3d 872, 876 (9th Cir. 2012) (citation omitted).
Qualcomm licenses its cellular patent portfolio, including its SEPs, to original equipment manufacturers ("OEMs") with products, like cellphones, that incorporate Qualcomm's patented technologies. Though Qualcomm licenses its patents at the level of completed cellphone devices, it does not license its patents at the level of any given cellphone component. When Qualcomm licenses its patents, it receives a royalty that is typically 5% of the device's wholesale net selling price.
Besides licensing technology, Qualcomm also designs and sells semiconductor devices known as modem chips ("chips") to OEMs. Chips enable cellphones to connect with cellular networks as well as provide other functions. Qualcomm is the leading supplier of CDMA and premium LTE chips worldwide.
In a separate action brought in January 2017, the Federal Trade Commission ("FTC") sued Qualcomm, alleging that Qualcomm engaged in unfair methods of competition in violation of the Federal Trade Commission Act ("FTCA") and the Sherman Act. Afterward, many follow-on consumer antitrust class actions were filed against Qualcomm, generally alleging that Qualcomm's conduct violated federal and state antitrust and consumer protection laws based on similar claims of anti-competitive conduct. The Judicial Panel on Multidistrict Litigation centralized these consumer class actions as a consolidated class action in the United States District Court for the Northern District of California before the same judge presiding over the separate FTC action.
Plaintiffs in this multidistrict litigation are consumers who bought cellphones and allege that Qualcomm maintained a monopoly in chips by: (1) engaging in a "no-license-no-chips" policy by which Qualcomm sold chips only to...
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