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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 1 of 35
`
`Kalpana Srinivasan (237460)
`SUSMAN GODFREY L.L.P.
`1900 Avenue of the Stars, 14th Floor
`Los Angeles, CA 90067
`Telephone: (310) 789-3100
`Facsimile: (310) 789-3150
`Email: ksrinivasan@susmangodfrey.com
`
`Joseph W. Cotchett (36324)
`COTCHETT, PITRE & McCARTHY, LLP
`840 Malcolm Road, Suite 200
`Burlingame, CA 94010
`Telephone: (650) 697-6000
`Facsimile: (650) 697-0577
`Email: jcotchett@cpmlegal.com
`
`Plaintiffs’ Interim Co-Lead Counsel
`
`
`
`
`
`IN RE: QUALCOMM ANTITRUST
`LITIGATION
`
`
`
`
`
`
`This Document Relates To:
`
`ALL ACTIONS
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`
`
`Case No. 17-md-2773-JSC
`
`PLAINTIFFS’ OPPOSITION TO
`DEFENDANT QUALCOMM
`INCORPORATED’S MOTION TO
`DISMISS SECOND AMENDED
`COMPLAINT
`
`Date: November 15, 2022
`Time: 9:00 a.m.
`Dept.: Courtroom 8, 19th Floor
`Judge: Hon. Jacqueline Scott Corley
`
`Trial Date: TBD
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`PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS SECOND AMENDED COMPLAINT
`Case No. 17-md-2773-JSC
`
`10918428v1/015494
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 2 of 35
`
`TABLE OF CONTENTS
`
`I. 
`
`II. 
`
`INTRODUCTION .............................................................................................................. 1 
`
`ARGUMENT ...................................................................................................................... 5 
`
`A. 
`
`B. 
`
`The FTC Decision Does Not Dictate the Result of Plaintiffs’ State-Law
`Claims Under the Doctrines of Res Judicata, Collateral Estoppel, or
`Stare Decisis. .......................................................................................................... 5 
`
`Plaintiffs State Plausible Claims Under the Cartwright Act. .................................. 7 
`The Cartwright Act is “Broader and Deeper” than the Sherman
`1. 
`Act. .............................................................................................................. 7 
`
`2. 
`
`Plaintiffs Adequately Allege a Cartwright Act Claim. ............................. 10 
`
`a. 
`
`b. 
`
`c. 
`
`d. 
`
`Plaintiffs’ Factual Allegations Must Be Evaluated as a
`Whole. ........................................................................................... 10 
`
`Plaintiffs’ Tying and Exclusive Dealing Allegations State
`a Claim in Light of Cipro and Fisherman’s Wharf. ...................... 13 
`
`Plaintiffs Allege Anticompetitive Harm in the Tying and
`Tied Markets. ................................................................................ 13 
`
`The FTC Decision Does Not Require a Different Result. ............ 16 
`
`C. 
`
`Plaintiffs State a Claim Under the UCL. ............................................................... 19 
`1. 
`Plaintiffs adequately plead a derivative “unlawful” prong claim. ............ 20 
`
`2. 
`
`Plaintiffs adequately plead a UCL claim under the “unfair”
`prong. ........................................................................................................ 20 
`
`a. 
`
`b. 
`
`The fate of Plaintiffs’ UCL unfair prong claim does not
`depend on whether Plaintiffs adequately allege a
`Cartwright Act claim. .................................................................... 20 
`
`tests for
`three
`Qualcomm’s conduct satisfies all
`unfairness under the UCL. ............................................................ 22 
`
`3. 
`
`Plaintiffs adequately plead a UCL claim under the “fraudulent”
`prong. ........................................................................................................ 24 
`
`III. 
`
`CONCLUSION ................................................................................................................. 25 
`
`
`
`
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`10918428v1/015494
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 3 of 35
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Apple Inc. v. Samsung Elecs. Co., Ltd.,
`2011 WL 4948567 (N.D. Cal. Oct. 18, 2011) ........................................................................... 9
`
`Arce v. Kaiser Found. Health Plan, Inc.,
`
`181 Cal. App. 4th 471 (2010) ................................................................................................. 23
`
`Aryeh v. Canon Bus. Sols., Inc.,
`55 Cal.4th 1185 (2013) ............................................................................................................. 8
`
`AT&T Mobility LLC v. AU Optronics Corp.,
`707 F.3d 1106 (9th Cir. 2013) ................................................................................................... 9
`
`Aya Healthcare Servs., Inc. v. AMN Healthcare, Inc.,
`9 F.4th 1102 (9th Cir. 2021) ............................................................................................... 5, 17
`
`Brooks v. Bank of Am., N.A.,
`2021 WL 1541643 (S.D. Cal. Apr. 20, 2021) ......................................................................... 22
`
`Camacho v. Auto. Club of S. Cal.,
`142 Cal. App. 4th 1394 (2006) ............................................................................................... 24
`
`Cel-Tech Commc'ns, Inc. v. L.A. Cellular Tele. Co.,
`20 Cal.4th 163 (1999) ................................................................................................. 20, 21, 23
`
`Cellular Plus, Inc. v. Superior Ct.,
`14 Cal. App. 4th 1224 (1993) ................................................................................................. 10
`
`Cent. Valley Med. Grp., Inc. v. Indep. Physician Assocs. Med. Grp., Inc.,
`2019 WL 3337891 (E.D. Cal. July 25, 2019) ................................................................... 20, 21
`
`Chavez v. Whirlpool Corp.,
`93 Cal. App. 4th 363 (2001) ................................................................................................... 21
`
`City of Oakland v. Oakland Raiders,
`20 F.4th 441 (9th Cir. 2021) ............................................................................................... 5, 17
`
`City of San Jose v. Office of the Comm’r of Baseball,
`776 F.3d 686 (9th Cir. 2015) ................................................................................................... 21
`
`Continental Ore Co. v. Union Carbide & Carbon Corp.,
`370 U.S. 690 (1962) ................................................................................................................ 13
`
`Corwin v. L.A. Newspaper Serv. Bureau, Inc.,
`4 Cal. 3d 842 (1971) ............................................................................................................... 13
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`
`County of Tuolumne v. Sonora Cmty. Hosp.,
`236 F.3d 1148 (9th Cir. 2001) ................................................................................................... 9
`
`Darling v. Green,
`2013 WL 11323320 (C.D. Cal. Sept. 25, 2013) ...................................................................... 24
`
`Darush v. Revision LP (“Darush I”),
`2013 WL 1749539 (C.D. Cal. Apr. 10, 2013) .......................................................................... 9
`
`Darush v. Revision LP (“Darush II”),
`
`2013 WL 12142621 (C.D. Cal. Aug. 28, 2013) ........................................................................ 9
`
`Dimidowich v. Bell & Howell,
`803 F.2d 1473 (9th Cir. 1986) ................................................................................................... 7
`
`Eastman v. Quest Diagnostics,
`2016 WL 1640465 (N.D. Cal. Apr. 26, 2016) .......................................................................... 9
`
`Epic Games, Inc. v. Apple Inc.,
`559 F. Supp. 3d 898 (N.D. Cal. 2021), injunction stayed pending appeal, 2021
`WL 6755197 (9th Cir. Dec. 8, 2021) ...................................................................................... 21
`
`Epic Games, Inc. v. Apple, Inc.,
`No. 21-16506 .......................................................................................................................... 21
`
`Fisherman’s Wharf Bay Cruise Corp. v. Superior Ct.,
`114 Cal. App. 4th 309 (2003) .......................................................................................... passim
`
`Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc.,
`55 Cal. App. 4th 381 (2020) ................................................................................................... 17
`
`Forsyth v. Humana, Inc.,
`114 F.3d 1467 (9th Cir. 1997) ................................................................................................. 16
`
`Freeman v. San Diego Ass’n of Realtors,
`322 F.3d 1133 (9th Cir. 2003) ................................................................................................. 19
`
`Freeman v. San Diego Ass’n of Realtors,
`77 Cal. App. 4th 171 (1999) ................................................................................................... 19
`
`FTC v. Qualcomm, Inc.,
`969 F.3d 974 (9th Cir. 2020) ............................................................................................ passim
`
`Gainesville Inv., LLC v. Astroenery Solar, Inc.,
`2022 WL 2818259 (C.D. Cal. July 18, 2022) ......................................................................... 24
`
`Gately v. Massachusetts,
`2 F.3d 1221 (1st Cir. 1993) ....................................................................................................... 6
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 5 of 35
`
`Gee v. Tenneco, Inc.,
`615 F.2d 857 (9th Cir. 1980) ..................................................................................................... 7
`
`Hemmings v. Tidyman’s, Inc.,
`285 F.3d 1174 (9th Cir. 2002) ................................................................................................... 7
`
`Hendricks v. Dynegy Power Mktg., Inc.,
`160 F. Supp. 2d 1155 (S.D. Cal. 2001) ................................................................................... 20
`
`Imperial Irrigation Dist. v. Cal. Indep. Sys. Operator Corp.,
`
`2016 WL 4087302 (S.D. Cal. Aug. 1, 2016) .................................................................... 21, 23
`
`In re Ambac Bond Ins. Cases,
`2016 WL 661903 (Cal. Ct. App. Feb. 18, 2016) (unpublished) ............................................. 21
`
`In re Automobile Antitrust Cases I & II,
`1 Cal. App. 5th 127 (2016), rev. denied (Oct. 19, 2016) ........................................ 4, 11, 12, 23
`
`In re Cal. Gasoline Spot Market Antitrust Litig.,
`2021 WL 1176645 (N.D. Cal. Mar. 29, 2021) .......................................................................... 8
`
`In re Cipro Cases I &II,
`61 Cal. 4th 116 (2015) ..................................................................................................... passim
`
`In re Nat’l Collegiate Athletic Ass’n Athletic Grant-in-Aid Cap Antitrust Litig.,
`958 F.3d 1239 (9th Cir. 2020) ............................................................................................... 5, 6
`
`In re Osborne,
`76 F.3d 306 (9th Cir. 1996) ....................................................................................................... 6
`
`In re Qualcomm Antitrust Litig.,
`328 F.R.D. 280 (N.D. Cal. 2018) .............................................................................................. 8
`
`Intel Corp. v. Fortress Inv. Grp. LLC,
`2020 WL 1983487 (N.D. Cal. Mar. 19, 2020) ........................................................................ 22
`
`Knevelbaard Dairies v. Kraft Foods, Inc.,
`232 F.3d 979 (9th Cir. 2000) ................................................................................................... 10
`
`Korea Kumho Petrochem. v. Flexsys Am. L.P.,
`2008 WL 686834 (N.D. Cal. Mar. 11, 2008) ...................................................................... 5, 20
`
`Kwikset Corp. v. Super. Ct.,
`51 Cal. 4th 310 (2011) ...................................................................................................... 22, 25
`
`Leegin Creative Leather Prods. v. PSKS, Inc.,
`551 U.S. 877 (2007) .................................................................................................................. 9
`
`LePage’s, Inc. v. 3M,
`324 F.3d 141 (3d Cir. 2003) .................................................................................................... 18
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 6 of 35
`
`Littlejohn v. United States,
`321 F.3d 915 (9th Cir. 2003) ..................................................................................................... 5
`
`LLC v. Nat’l Assoc. of Realtors,
`32 F.4th 824 (9th Cir. 2022) ..................................................................................................... 8
`
`Loeffler v. Target Corp.,
`58 Cal.4th 1081 (2014) ........................................................................................................... 20
`
`Lona’s Lil Eats, LLC v. DoorDash, Inc.,
`
`2021 WL 151978 (N.D. Cal. Jan. 18, 2021) ........................................................................... 25
`
`Lorenzo v. Qualcomm, Inc.,
`2009 WL 2448375 (S.D. Cal. Aug. 10, 2009) ........................................................................ 25
`
`Lozano v. AT&T Wireless Servs.,
`504 F.3d 718 (9th Cir. 2007) ................................................................................................... 23
`
`McAdams v. Monier, Inc.,
`182 Cal. App. 4th 174 (2010) ................................................................................................. 24
`
`McWane, Inc. v. FTC,
`783 F.3d 814 (11th Cir. 2015) ................................................................................................. 16
`
`Microsoft Corp. v. Motorola, Inc.,
`864 F. Supp. 2d 1023 (W.D. Wash. 2012) ........................................................................ 23, 25
`
`Multistate Legal Stud., Inc. v. Harcourt Brace Jovanovich Legal & Pro. Publ’ns,
`Inc.,
`63 F.3d 1540 (10th Cir. 1995) ................................................................................................. 16
`
`Name.Space v. ICANN,
`795 F.3d 1124 (9th Cir. 2015) ................................................................................................... 8
`
`Pacific Bell Tel. Co. v. linkLine Communications,
`555 U.S. 438 (2009) .......................................................................................................... 17, 18
`
`Premier Elec. Const. Co. v. Nat’l Elec. Contractors Ass’n, Inc.,
`814 F.2d 358 (7th Cir. 1987) ................................................................................................... 19
`
`Royal Primo Corp. v. Whitewater W. Indus., Ltd,
`2016 WL 4080177 (N.D. Cal. July 29, 2016) ......................................................................... 25
`
`Sam Fox Pub. Co. v. United States,
`366 U.S. 683 (1961) .................................................................................................................. 5
`
`Schnall v. Hertz Corp.,
`78 Cal.App.4th 1144 (2000) ................................................................................................... 20
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 7 of 35
`
`Scilex Pharms. Inc. v. Sanofi-Aventis U.S. LLC,
`552 F.Supp.3d 901 (N.D. Cal. 2021) ...................................................................................... 25
`
`Sidibe v. Sutter Health,
`No. 3:12-cv-4854-LB, ECF No. 1530 (Verdict Form) (N.D. Cal. Mar. 11,
`2022) ......................................................................................................................................... 9
`
`State of California ex. rel. Van de Kamp v. Texaco,
`46 Cal.3d 1147 (1988) .............................................................................................................. 8
`
`
`Stromberg v. Qualcomm Inc.,
`14 F.4th 1059 (9th Cir. 2021) ............................................................................................... 6, 7
`
`TCL Commn’s Tech. Holdings v. Telefonaktienbolaget LM Ericsson,
`2016 WL 7049263 (C.D. Cal. Aug. 9, 2016) .......................................................................... 25
`
`UAS Mgmt., Inc. v. Mater Misericordiae Hosp.,
`169 Cal. App. 4th 357 (2008) ................................................................................................. 13
`
`UFCW & Emps. Benefit Trust v. Sutter Health,
`No. CGC-14-538451, 2019 WL 2372274 (Cal. Super. Ct. Mar. 14, 2019) .............................. 9
`
`Universal Grading v. eBay,
`563 F. App’x 571 (9th Cir. 2014) ............................................................................................. 8
`
`Williams v. Gerber Prods. Co.,
`552 F.3d 934 (9th Cir. 2008) ............................................................................................. 20, 24
`
`ZF Meritor, LLC v. Eaton Corp.,
`696 F.3d 254 (3d Cir. 2012) .................................................................................................... 17
`
`Zhang v. Superior Ct.,
`57 Cal.4th 364 (2013) ............................................................................................................. 24
`
`Statutes
`
`California Business & Professions Code Section 17043 .............................................................. 10
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`California’s Cartwright Act and Unfair Competition ............................................................ passim
`
`Sherman Act ........................................................................................................................... passim
`
`Rules
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`Fed. R. Civ. P. 9(b) ....................................................................................................................... 24
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`Other Authorities
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`Wright & Miller, 5A FED. PRAC. & PROC. CIV. § 1298 & n.22 (4th ed. Apr. 2022
`update) ..................................................................................................................................... 25
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`Cal. Lawyers Ass'n, Antitrust & Unfair Competition Law (rev. Feb. 2022) .................................. 9
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`Einer Elhauge, Tying, Bundled Discounts, and the Death of the Single Monopoly
`Profit Theory, 123 Harv. L. Rev. 397, 472-73 (2009) ............................................................ 18
`
`Einer Elhauge, U.S. Antitrust Law & Economics 466 (3d ed. 2018) .............................................. 3
`
`Herbert Hovenkamp, Antitrust and Platform Monopoly, 130 Yale L.J. 1952, 2005,
`2020 (2021) ............................................................................................................................. 14
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`Herbert Hovenkamp, FRAND and Antitrust, 105 Cornell L. Rev. 1683 (2020) ........................... 19
`
`Herbert Hovenkamp, Tying, Exclusivity, and Standard-Essential Patents, 19
`Colum. Sci & Tech. L. Rev. 79 (2017) ................................................................................... 14
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 9 of 35
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`I.
`
`INTRODUCTION
`Qualcomm urges this Court to dismiss Plaintiffs’ claims, contending they mirror those
`addressed in FTC v. Qualcomm, Inc., 969 F.3d 974 (9th Cir. 2020). But Plaintiffs’ allegations are
`undeniably based on different laws, different theories of anticompetitive harm, a different factual
`record, and different legal standards. Qualcomm concedes, as it must, that the FTC decision does
`not bar Plaintiffs’ claims as a matter of “res judicata or collateral estoppel.” It thus falls back on a
`
`theory that the FTC decision is stare decisis. But while the FTC action was decided under the federal
`Sherman Act, Plaintiffs have amended their Complaint (“SAC”) to plead claims only under
`California’s Cartwright Act and Unfair Competition Law (“UCL”) on behalf of California
`consumers. ECF No. 887. Qualcomm then pivots to the erroneous suggestion that standards for
`liability under the Cartwright Act and UCL are identical to those under the Sherman Act. This
`ignores binding authority holding that (1) the Cartwright Act makes illegal conduct that does not
`violate the Sherman Act and (2) the UCL makes illegal conduct that does not violate either antitrust
`law. Infra § 2.B.II (citing cases).
`Tellingly, Qualcomm mentions the California Supreme Court’s decision in In re Cipro Cases
`I &II, 61 Cal. 4th 116 (2015), only in passing. MTD 3. Cipro held that the U.S. Supreme Court’s
`decisions regarding the intersection of patent and antitrust law are “not dispositive on matters of
`state law” and do not “dictate how the Cartwright Act must be read.” 61 Cal. 4th at 142. Directly
`contrary to the FTC decision, Cipro held that, under the Cartwright Act, the “abuse of patent rights
`may also run afoul of the antitrust law,” and the “scope of the patent test” is not the law of California.
`Id. at 145, 150. Cipro held that a “reverse payment patent settlement” agreement could give rise to
`antitrust liability under the Cartwright Act because an “agreement to exchange consideration for
`elimination of any portion of the period of competition that would have been expected had the patent
`been litigated is a violation of the Cartwright Act.” Id. at 150-51. Plaintiffs’ allegations plausibly
`state a claim in light of Cipro. Qualcomm’s assertion that Plaintiffs merely amended the SAC to
`“remove” references to the FTC’s complaint ignores the fact that Plaintiffs’ claims arise under a
`different body of laws and completely elides Plaintiffs’ different factual allegations—based on years
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 10 of 35
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`of developing a different substantive record—explaining why their state-law claims are actionable
`under California law and not foreclosed by the FTC decision.
`NLNC Tying: Plaintiffs allege Qualcomm’s NLNC policy is unlawful tying under California
`law—a legal framework for evaluating anticompetitive conduct and effects—that Qualcomm
`concedes the FTC never alleged under federal antitrust law. MTD 3. Plaintiffs allege Qualcomm had
`market power in the markets for the tying products, namely CDMA and Premium LTE chipsets, and
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`coerced OEMs to accept a supra-FRAND license in the tied market for Qualcomm’s Standard
`Essential Patents or “SEPs.” SAC ¶¶ 2, 55, 58-60, 78-86. More specifically, Qualcomm coerced
`OEMs to:
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` Buy a separate, supra-FRAND license to Qualcomm’s entire 3G and 4G SEP portfolio
`(not only for CDMA and Premium LTE, but also for WCDMA/UMTS and non-
`Premium LTE technology);
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` Pay substantial, supra-FRAND royalties representing several multiples of a FRAND
`rate, calculated as a percentage of the entire price of the phone, regardless of whether
`the phone used Qualcomm’s chips or a competitors’;
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` Forego the right to litigate Qualcomm’s failure to license on FRAND terms or whether
`Qualcomm’s patents were valid, essential, infringed, and not exhausted by the sale of
`Qualcomm’s chips.
`Id. ¶¶ 2, 15, 64, 76. Qualcomm’s simultaneous refusal to license chipset competitors pursuant to its
`FRAND commitments strengthened the tie’s effectiveness: had Qualcomm done so in a but-for
`world, chipset competitors would have received a license calculated on the price of the chipset rather
`than the phone, passing the savings to OEMs and ultimately consumers. Id. ¶¶ 18, 193-94. Instead,
`Qualcomm’s supra-competitive royalties amounted to billions of dollars, 93% of which were passed
`on to consumer class members in the form of higher device prices. Id. ¶¶ 21, 198, 212, 241.
`Exclusive Dealing: Qualcomm used its profits from the supra-FRAND royalties to offer so-
`called “marketing incentives” or “rebates” to OEMs in exchange for exclusivity or near-exclusivity.
`Id. ¶ 72. Although Qualcomm labels these payments as “incentives” or “rebates,” they are not true
`discounts but are rather “penalties for non-exclusivity.” Id. ¶¶ 16, 73, 153. As Plaintiffs explain—
`and as supported by the expert analysis of Professor Einer Elhauge—a true loyalty “discount” offers
`customers a “reduction from the price that would have been charged without the loyalty condition,”
`while a disloyalty penalty “threatens disloyal customers with higher prices than they would have
`
`2
`PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS SECOND AMENDED COMPLAINT
`Case No. 17-md-2773-JSC
`
`10918428v1/015494
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 11 of 35
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`paid without the loyalty program.” Id. ¶ 73; accord Einer Elhauge, U.S. Antitrust Law & Economics
`466 (3d ed. 2018). Here, there was no discount: Qualcomm’s prices for its chips and royalties (and
`thus the “all-in” chipset price) were supra-competitive, and the evidence dispels any claim that a
`change in Qualcomm’s royalty rates would have been offset by an opposing change in Qualcomm’s
`chipset prices under the “single monopoly profit” theory. Id. ¶¶ 74-75, 199, 201.
`Harm to Competition: Qualcomm’s conduct caused anticompetitive effects in the tied market
`
`for Qualcomm’s SEPs similar to those the California Supreme Court found unlawful in Cipro. In
`Cipro, the Court held that “[a]n agreement to exchange consideration for elimination of any portion
`of the period of competition that would have been expected had a patent been litigated is a violation
`of the Cartwright Act.” Cipro, 61 Cal. 4th at 150. In this action, Plaintiffs’ allegations describe the
`same anticompetitive effect in the tied market: that Qualcomm’s tie “allow[ed] weak patents to offer
`the exact same” (or, worse, an even greater) “exclusionary potential and monopoly possibilities as
`strong ones,” substituting “consensual monopoly in place of potential competition that would have
`followed” litigation regarding invalidity or noninfringement, FRAND royalty rates, exhaustion, or
`essentiality. Cf. id. at 130, 150-51; SAC ¶¶ ¶¶ 2, 15, 60, 235. As paragraph 74 of the SAC illustrates,
`Qualcomm’s artificial insulation of its patents from challenge enabled Qualcomm to charge a greater
`“all-in” price for its modem chips, passing on the overcharges to consumers buying cellular devices.
`Had Qualcomm charged a monopoly chipset price and a FRAND royalty, it would face a threat from
`the competitor’s “all in” price. Qualcomm avoids such competition by (1) using its chipset
`monopolies to coerce OEMs to pay supra-FRAND royalties regardless of who supplies the chips
`while (2) providing so-called “rebates” only when OEMs use Qualcomm’s chips. Id. ¶¶ 74-75.
` Plaintiffs’ allegations state a plausible Cartwright Act claim. Although a business may
`“develop monopoly power” through “the superiority of its product or business acumen,” it may not
`“maintain that power through agreement and combination with others” that provides “an enclave
`free from the danger of outside incursions in which to exercise monopoly power and extract
`monopoly premiums.” Cipro, 61 Cal. 4th at 149 (cleaned up). California’s “[a]ntitrust law condemns
`a patentee’s payment to maintain supra-competitive prices to be shared among the patentee and the
`challenger rather than face what might have been a competitive market.” Id. All the more so here,
`
`3
`PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS SECOND AMENDED COMPLAINT
`Case No. 17-md-2773-JSC
`
`10918428v1/015494
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`Case 3:17-md-02773-JSC Document 901 Filed 09/15/22 Page 12 of 35
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`where Qualcomm accomplished the same end coercively “through a combination of written
`exclusive dealing contracts and exclusive dealing arrangements implied through its other unlawful
`practices (illegal tie-ins and unfair pricing discrimination).” Fisherman’s Wharf Bay Cruise Corp.
`v. Superior Ct., 114 Cal. App. 4th 309, 335-37 (2003).
`Qualcomm’s attempt to avoid this conclusion by relying on the FTC decision is to no avail.
`The FTC decision expressly considered Qualcomm’s NLNC policy in isolation from Qualcomm’s
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`other alleged conduct. FTC, 969 F.3d at 993. As to the NLNC policy standing alone, the Court found
`that (1) it “raises the ‘all-in’ price that an OEM must pay for modem chips (chipset + licensing
`royalties) regardless of which chip supplier the OEM chooses to source its chips from”; (2) “whether
`that all-in price is reasonable or unreasonable is an issue that sounds in patent law, not antitrust law”;
`and (3) “it involves potential harms to Qualcomm’s customers, not its competitors” and thus fails to
`show harm to competition “in the relevant antitrust markets.” Id. at 1002. When separately
`considering Qualcomm’s practices in the chipset markets, standing alone, the Court found that the
`FTC alleged Qualcomm charged “ultralow prices on its own modem chips,” without establishing
`“predatory” or “below-cost” pricing. Id.
`By contrast, such restraints would not be considered in isolation under the Cartwright Act,
`as the “character and effect” of Qualcomm’s conduct “are not to be judged by dismembering it and
`viewing its separate parts, but only by looking at it as a whole.” In re Automobile Antitrust Cases I
`& II, 1 Cal. App. 5th 127, 152 (2016) (cleaned up), rev. denied (Oct. 19, 2016). Plaintiffs do not
`allege that Qualcomm charged “ultralow” prices for its chipsets. Instead, Plaintiffs’ SAC plausibly
`explains how the combination of Qualcomm’s NLNC tie and exclusive dealing arrangements raise
`rivals’ costs, insulating Qualcomm from competition and increasing prices in both the tying and
`tied markets. The California Supreme Court would not immunize such practices from antitrust
`scrutiny merely because Qualcomm’s anticompetitive conduct involves the assertion of patent
`rights and potential breaches of contractual obligations. Cipro, 61 Cal. 4th at 145. And contrary to
`FTC’s dicta that increased prices to OEMs and consumers failed to show harm to competition, the
`Ninth Circuit itself has more recently held otherwise: Because the “principal objective of antitrust
`policy is to maximize consumer welfare… increased prices” paid by customers are “precisely the
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`4
`PLAINTIFFS’ OPPOSITION TO MOTION TO DISMISS SECOND AMENDED COMPLAINT
`Case No. 17-md-2773-JSC
`
`10918428v1/015494
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