A U.S. federal judge ruled against Qualcomm Inc.'s motion to dismiss a Federal Trade Commission case that alleges the large supplier of smartphone chips used its position in the market to compete unfairly.
The Monday ruling by U.S. District Judge Lucy Koh is a setback -- though not an unexpected one -- in Qualcomm's broad legal battle over its business practices. That fight includes a separate lawsuit filed by Apple Inc. against Qualcomm which makes legal arguments similar to the U.S. government's.
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Judge Koh's decision that the government's case could move forward rejected Qualcomm's claim, filed in April in a Northern California federal district court, that the FTC's complaint failed to support even basic elements of an antitrust violation.
The FTC says Qualcomm, whose technology is used in almost all smartphones, acts unfairly by refusing to sell its chips to handset makers that don't buy a license to use its patents -- which are deemed essential to cellular communications -- and by refusing to sell licenses to competing chip makers. The government says Qualcomm further impaired competition by using its dominant position to compel Apple to use its chips exclusively.
Motions to dismiss such suits generally have slim chances of acceptance, legal experts said, because the judge is required to accept the plaintiff's factual allegations as true and the defendant must persuade the judge that a lawsuit presents no grounds to argue the case.
"We respect the Court's decision, which is based on the legal standards that apply at this early stage of the case," said Qualcomm general counsel Don Rosenberg in a statement, adding that "the FTC will have the burden to prove its claims which we continue to believe are without merit."
The FTC's action faces an uncertain future despite the judge's ruling. The case was filed during the waning days of the Obama administration, and Maureen Ohlhausen, then the commission's lone Republican, dissented from the FTC's move to file the lawsuit. Under President Donald Trump, Ms. Ohlhausen became acting FTC chair, and several commission seats are unfilled. If Republicans come to make up a majority on the commission, she may call a vote on whether to withdraw the case.
Write to Ted Greenwald at Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
June 27, 2017 13:36 ET (17:36 GMT)