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EIMER STAHL LLP 

Nathan P. Eimer 

neimer@eimerstahl.com 

Brian Y. Chang (SBN 287757) 

bchang@eimerstahl.com 

224 South Michigan Avenue 

Suite 1100 

Chicago, IL 60604 

Phone: (312) 660-7600 

Fax: (312) 692-1718 

Attorneys for LG Electronics, Inc. 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION 

FEDERAL TRADE COMMISSION 

Plaintiff, 

v. 

QUALCOMM INCORPORATED, 

a Delaware corporation, 

Defendant. 

Case No. 5:17-CV-00220-LHK-NMC 

BRIEF OF AMICUS CURIAE 

LG ELECTRONICS, INC. 

IN OPPOSITION TO QUALCOMM’S 

MOTION TO STAY THE JUDGMENT 

PENDING APPEAL 

Case 5:17-cv-00220-LHK Document 1501-1 Filed 06/11/19 Page 1 of 7
 

 

BRIEF OF AMICUS CURIAE LG ELECTRONICS, INC.

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INTEREST OF AMICUS CURIAE AND 

SUMMARY OF ARGUMENT 

Amicus curiae LG Electronics, Inc., (“LGE”) is a Korean electronics company and an original 

equipment manufacturer (“OEM”) that designs, markets, and sells Cellular Handsets. Op. 3. As an 

OEM, LGE has suffered numerous harms resulting from Qualcomm’s anticompetitive conduct in the 

chip industry, which this Court has detailed. That conduct, as found by this Court, has included “cutting 

off LGE’s chip supply, threatening to withdraw technical support, threatening to require the return of 

software, charging higher patent royalty rates when LGE used a rival’s instead of Qualcomm’s chip, 

giving LGE chip incentive funds if LGE purchased at least 85% of its chips from Qualcomm, and giving 

rebates on the price of Qualcomm’s chips.” Op. 45. To remedy these and other violations, this Court 

(among other orders) enjoined Qualcomm (1) not to condition its supply of modem chips on a customer’s 

patent license status and to negotiate license terms in good faith and in a non-discriminatory manner, 

op. 227; (2) to make exhaustive SEP licenses available to modem-chip suppliers on fair, reasonable, and 

non-discriminatory (“FRAND”) terms, op. 229; and (3) not to enter express or de facto exclusive dealing 

agreements for the supply of modem chips, op. 229–30. In support of each of these remedies, the Court 

explicitly cited the risk of ongoing harm to LGE, among other businesses and consumers, as a reason 

justifying relief. 

 Because “issuance of the stay [would] substantially injure” LGE, the Court should deny 

Qualcomm’s extraordinary motion. Nken v. Holder, 556 U.S. 418, 434 (2009). At this very moment, 

LGE and Qualcomm are negotiating several new license agreements, for CDMA, 4G, and 5G, as well 

as a new chip purchase agreement. Declaration of JongSang Lee, June 11, 2019 at ¶ 3, attached as 

Exhibit 2 to LG’s Motion for Leave to File (hereinafter “Lee Decl.”). Because, as this Court found, 

there is an extremely high risk that Qualcomm will persist in its anticompetitive conduct—and directly 

harm LGE and any other companies currently negotiating with Qualcomm—absent enforcement of its 

order, this Court should deny Qualcomm’s motion.1

 

                                                            

1

 In the interest of avoiding duplication, this brief will not repeat the arguments (which it hereby 

adopts) in the Federal Trade Commission’s opposition to Qualcomm’s motion. 

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ARGUMENT 

I. A Stay Should Not Issue If It Would Substantially Injure An Interested 

Non-Party 

“[A] stay pending appeal is an extraordinary remedy.” In re Rivera, No. 5:15-CV-402-EJD, 

2015 WL 6847973, at *2 (N.D. Cal. Nov. 9, 2015). It is not “a matter of right, even if irreparable injury 

might otherwise result.” Nken v. Holder, 556 U.S. 418, 433 (2009). “Instead, it is an exercise of judicial 

discretion.” Luna v. O'Keefe, No. 17-CV-02129-LHK, 2018 WL 2197555, at *1 (N.D. Cal. May 14, 

2018) (Koh, J.) (citation omitted). Thus a court must evaluate the traditional stay factors “with 

obligatory restraint.” In re Rivera, 2015 WL 6847973, at *2. 

 One such factor—which Qualcomm does not mention—is “whether issuance of the stay will 

substantially injure the other parties interested in the proceeding.” Luna, 2018 WL 2197555, at *1; see 

Nken, 556 U.S. at 434. Critically, “[t]his test permits the Court to consider the harm to non-parties.” E. 

Bay Sanctuary Covenant v. Trump, 354 F. Supp. 3d 1085, 1092 (N.D. Cal. 2018) (citing Latta v. Otter, 

771 F.3d 496, 500 (9th Cir. 2014); Lair v. Bullock, 697 F.3d 1200, 1215 (9th Cir. 2012)). Thus, this 

Court in East Bay Sanctuary Covenant declined to stay its injunction of an immigration rule that 

threatened non-party asylum seekers with “significant harms.” 354 F. Supp. 3d at 1088, 1092. Applying 

the same logic, a federal court in Texas denied a debtor’s motion to stay a bankruptcy order, reasoning 

that a stay “would substantially injure interested third parties—specifically, the mortgage company and 

mortgage servicing company.” Lall v. Powers, No. 3:19-CV-0398-B, 2019 WL 2249717, at *3 (N.D. 

Tex. May 24, 2019). And a federal judge in Ohio granted a stay in a tax case precisely to avoid harming 

“third parties.” NorCal Tea Party Patriots v. Internal Revenue Serv., No. 1:13-cv-341, 2015 WL 

13187292, at *1 (S.D. Ohio July 15, 2015). These decisions—of which there are many—underscore 

the significance of non-party impact in the stay analysis. 

II. Issuing a Stay Would Substantially Injure LGE By Depriving It of the Protection 

Afforded by Four of This Court’s Lawful Remedies 

Of the Court’s five injunctive orders, four in particular will help protect LGE from Qualcomm’s 

ongoing anticompetitive practices. Conversely, staying those orders would “substantially injure” LGE. 

Luna, 2018 WL 2197555, at *1. 

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First, without this Court’s order that Qualcomm “not condition the supply of modem chips on a 

customer’s patent license status” and that it “negotiate or renegotiate license terms with customers in 

good faith under conditions free from the threat of lack of access to or discriminatory provision of 

modem chip supply or associated technical support or access to software,” op. 227, LGE will be 

substantially harmed. 

 For years, Qualcomm has targeted LGE and other OEMs with precisely these tactics—and will 

do so again, if the Court lets it. As this Court explained, Qualcomm’s threats to “OEMs’ chip supply are 

an ongoing company practice that began with Qualcomm’s co-founder, Dr. Irwin Jacobs.” Op. 210. In 

2004, Jacobs threatened to “stop accepting LGE purchase orders,” “cease all shipments of” chips, 

“withdraw all of its substantial . . . technical support,” and “require that LGE return to QUALCOMM 

all versions and derivations of [its] WCDMA ASIC software.” Op. 48. Jacobs testified that Qualcomm 

followed through on this threat and “did not ship to [LGE] the chips that were specified.” Op. 48. LGE 

negotiated an end to this dispute from a position of extreme weakness, given that “LGE had no option 

but to agree to whatever Qualcomm demanded” lest it endanger LGE’s “mobile business.” Op. 49 

(citation omitted). It gave in to Qualcomm’s high royalty rates and other demands, including chip 

incentive funds, “effectively result[ing] in [Qualcomm’s] exclusivity” as LGE’s chip supplier. Op. 49. 

This pattern repeated in later negotiations, which the Court has described. Op. 45–52. 

 Without the benefit of this Court’s injunction, LGE will immediately face the same threats. Lee 

Decl. ¶ 8. LGE’s agreements with Qualcomm expired on December 31, 2018, and the two companies 

are currently negotiating new license agreements for CDMA, 4G, and 5G, as well as a new chip purchase 

agreement. Lee Decl. ¶¶ 3, 6. To protect LGE in continuing negotiations over the next set of long-term 

agreements, it is necessary—as this Court found—to prohibit “Qualcomm from cutting off [LGE’s] chip 

supply, technical support, and access to software ensures that Qualcomm and [LGE] can negotiate patent 

license terms that reflect the fair value of Qualcomm’s patents, rather than terms that reflect Qualcomm’s 

monopoly power in modem chips.” Op. 228. Otherwise, Qualcomm will once again “exercise its 

dominance to extract unreasonably high royalties,” and will “continue to charge unreasonably high 

royalty rates would perpetuate its artificial surcharge on rivals’ chips, which harms rivals, OEMs, and 

consumers.” Op. 228. 

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Second, LGE also faces substantial harm if this Court puts on hold its order that Qualcomm 

“make exhaustive SEP licenses available to modem-chip suppliers on fair, reasonable, and nondiscriminatory (‘FRAND’) terms and to submit, as necessary, to arbitral or judicial dispute resolution to 

determine such terms.” Op. 229. 

This licensing strategy has harmed LGE in at least two ways. To start, because “[t]his practice 

has promoted rivals’ exit from the market, prevented rivals’ entry, and delayed or hampered the entry 

and success of other rivals,” Qualcomm can demand—and has demanded—“unreasonably high royalty 

rates” from LGE and other OEMs. Op. 114. Indeed, LGE testified (and this Court found) that 

Qualcomm’s favored royalty is “so high that it could lead to an aggregate royalty that would make it 

impossible to generate profit on handsets.” Op. 175. Making matters worse, Qualcomm’s unreasonably 

high royalty rates have “continue[d] the cycle of anticompetitive harm because royalty revenues fund” 

the “enormous chip incentive funds.” Op. 189. 

Reduced competition in modem chips caused by Qualcomm’s conduct is not theoretical, it can 

be seen in the market. Within hours of the announcement of Qualcomm’s April 16, 2019, settlement of 

Apple’s sprawling suit against it, which included a multiyear chipset supply deal with Apple, Intel 

announced its exit from the 5G modem chip market. See Angela Moscaritolo, “Intel Exits 5G Modem 

Business Following Apple, Qualcomm Deal”, PC Magazine (April 17, 2019) available at

pcmag.com/news/367829/intel-exits-5g-modem-business-following-apple-qualcomm-deal. As Intel’s 

Chief Executive Bob Swan stated, “In light of the announcement of Apple and Qualcomm, we assessed 

the prospects for us to make money while delivering this [5G] technology for smartphones and 

concluded at the time that we just didn’t see a path.” Asa Fitch, “Intel Trims Financial Forecast on 

Weaker Demand From Cloud, China”, Wall Street Journal (April 25, 2019) available at 

wsj.com/articles/intel-trims-financial-forecast-for-year-11556225435. Moreover, Qualcomm’s 

licensing practices have also harmed LGE even more directly, by preventing it from entering the chip 

supply market in the first place, as this Court expressly found. Op. 122 (describing Qualcomm’s refusal 

to license LGE in 2015, which caused LGE not to “enter[ ] the market as a modem chip supplier”). 

 Without the protection afforded by this Court’s second order, LGE will once again face the 

prospect of unreasonably high royalty rates and an inability to enter the chip supplier market. Lee Decl. 

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¶ 9. In the agreements that LGE and Qualcomm are currently negotiating, it is obviously important that 

LGE secure terms that do not make it impossible for it to generate a profit on handsets. By opening up 

the chip-supply market and weakening Qualcomm-erected barriers to entry, the order clears a path to 

more reasonable terms. The order also ensures that, should it wish to, LGE may enter the chip market 

“without fear of an infringement action.” Op. 229. 

Third, the Court’s injunction also protects LGE by forbidding Qualcomm from entering into 

“express or de facto exclusive dealing agreements for the supply of modem chips.” Op. 229–31. 

Qualcomm’s power to demand such agreements forces LGE to choose between paying unreasonably 

high prices and having no outside options for chipsets. Lee Decl. ¶ 10. This Court found that Qualcomm 

very recently compelled OEMs to enter into exclusive dealing arrangements, such as its conditioning of 

Samsung’s rebates on chipset exclusivity. Op. 219. If a stay issues, Qualcomm will surely revert to 

squeezing LGE and other OEMs through similar arrangements in order to “foreclose competition in 

[the] emerging [5G modem chip] market.” Op. 230. Since LGE is currently negotiating long-term 

agreements with Qualcomm at this very moment, this threat is far from hypothetical. 

Fourth, the Court’s injunction also protects LGE by forbidding Qualcomm from interfering with 

LGE’s ability to communicate with government agencies about potential law enforcement or regulatory 

matters. This is important because LGE has currently appeared in support of the Korea Fair Trade 

Commission’s (KFTC) case against Qualcomm. As the Court noted, Qualcomm used its leverage 

against Samsung to force it to withdraw its support of the KFTC in the same proceedings. Op. 231-32. 

In a related development, Apple also formally withdrew its support of the KFTC in the same proceedings 

within a few hours of signing an agreement settling its litigation with Qualcomm. See Choi Hyung-jo, 

“Apple exits Qualcomm-KFTC trial in South Korea after reaching settlement,” MLex Market Insight 

(Apr. 17, 2019). Without protection from the Court’s order, Qualcomm might seek to retaliate against 

LGE for its participation in support of the KFTC. Lee Decl. ¶ 11. 

CONCLUSION 

 Because “issuance of the stay will substantially injure” LGE, to say nothing of Qualcomm’s 

other customers and competitors, the Court should decline to grant such an extraordinary remedy. 

Luna, 2018 WL 2197555, at *1. 

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BRIEF OF AMICUS CURIAE LG ELECTRONICS, INC.

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Dated: June 11, 2019 Respectfully submitted, 

By: _/s/ Nathan P. Eimer____________ 

Nathan P. Eimer 

neimer@eimerstahl.com 

Brian Y. Chang (SBN 287757) 

bchang@eimerstahl.com 

EIMER STAHL LLP 

224 South Michigan Avenue 

Suite 1100 

Chicago, IL 60604 

Phone: (312) 660-7600 

Fax: (312) 692-1718 

Attorneys for 

LG Electronics, Inc. 

Case 5:17-cv-00220-LHK Document 1501-1 Filed 06/11/19 Page 7 of 7