Qualcomm’s Response Brief in Opposition 

to the FTC’s Request 

Case No. 5:17-cv-00220-LHK 

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CRAVATH, SWAINE & MOORE LLP 

Gary A. Bornstein (pro hac vice) 

gbornstein@cravath.com 

Yonatan Even (pro hac vice) 

yeven@cravath.com 

825 Eighth Avenue 

New York, New York 10019-7475 

Telephone: (212) 474-1000 

Facsimile: (212) 474-3700 

KEKER, VAN NEST & PETERS LLP 

Robert A. Van Nest (SBN 84065) 

rvannest@keker.com 

Eugene M. Paige (SBN 202849) 

epaige@keker.com 

Justina K. Sessions (SBN 270914) 

jsessions@keker.com 

633 Battery Street 

San Francisco, CA 94111-1809 

Telephone: (415) 391-5400 

Facsimile: (415) 397-7188 

Attorneys for Defendant 

QUALCOMM INCORPORATED 

MORGAN LEWIS & BOCKIUS LLP 

Richard S. Taffet (pro hac vice) 

richard.taffet@morganlewis.com 

101 Park Avenue 

New York, New York 10178-0060 

Tel: (212) 309-6000 

Fax: (212) 309-6001 

MORGAN LEWIS & BOCKIUS LLP 

Willard K. Tom (pro hac vice) 

willard.tom@morganlewis.com 

1111 Pennsylvania Ave. NW 

Washington, DC 20004-2541 

Telephone: (202) 739-3000 

Facsimile: (202) 739-3001 

MORGAN LEWIS & BOCKIUS LLP 

Geoffrey T. Holtz (SBN 191370) 

geoffrey.holtz@morganlewis.com 

One Market, Spear Street Tower 

San Francisco, CA 94105-1596 

Telephone: (415) 442-1000 

Facsimile: (415) 442-1001 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION 

FEDERAL TRADE COMMISSION, 

Plaintiff, 

vs. 

QUALCOMM INCORPORATED, 

a Delaware corporation, 

Defendant. 

Case No. 5:17-cv-00220-LHK

DEFENDANT QUALCOMM 

INCORPORATED’S RESPONSE BRIEF 

IN OPPOSITION TO THE FTC’S 

REQUEST THAT THE COURT ISSUE 

AN INJUNCTION WITHOUT 

CONSIDERING EVIDENCE OF POSTDISCOVERY FACTS 

Courtroom: 8, 4th Floor 

Judge: Hon. Lucy H. Koh 

Case 5:17-cv-00220-LHK Document 933 Filed 11/07/18 Page 1 of 7
1 Qualcomm’s Response Brief in Opposition 

to the FTC’s Request 

Case No. 5:17-cv-00220-LHK 

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The FTC concedes, as it must, that for this Court to issue a forward-looking permanent 

injunction, the FTC must prove that any violation of the FTC Act is “ongoing or likely to recur”. 

(ECF 928 at 1 (quoting FTC v. Evans Prods. Co., 775 F.2d 1084, 1087-88 (9th Cir. 1985)).) The 

FTC nevertheless argues that the Court should ignore critical evidence of recent events that bears 

directly on that question. The FTC does not argue that this evidence is irrelevant, but instead says 

the Court should not consider it because the events occurred after the close of fact discovery. 

Such willful blindness to current events would be both unprecedented and unwarranted. The FTC 

does not cite, and Qualcomm is not aware of, a single case in which a court considering an 

injunction under Section 13(b) has refused to hear evidence of relevant events simply because 

they occurred after fact discovery. To be clear, Qualcomm does not seek to reopen discovery—

much less the “perpetual discovery” the FTC claims. (Id. at 4.) Qualcomm asks only that the 

Court consider evidence of current market conditions before deciding whether to issue a forwardlooking injunction that may regulate multiple aspects of Qualcomm’s future business. While the 

FTC now asserts additional discovery would be necessary but infeasible, its solution—that the 

Court ignore the events entirely—would be error. Moreover, the FTC’s claim that Qualcomm has 

been “untimely” in raising this issue (id. at 2) is wrong; Qualcomm made clear to the FTC months 

ago that it intends to rely on post-discovery events, but the FTC repeatedly rebuffed Qualcomm’s 

efforts to discuss a process for refreshing the record. 

The parties agree that proof of market power is a necessary predicate to liability. Because 

the FTC must prove an ongoing violation or one that is about to occur, it must prove that 

Qualcomm currently has or is about to obtain and abuse market power. (See ECF 929 at 2.) But 

the FTC asks the Court to assess that issue based on evidence that is frozen in time. Its economic 

expert does not opine that Qualcomm held market power in any alleged market after 2016. (Id. at 

1.) That leaves a two-year gap before trial. The FTC contends it may bridge that gap—and ask 

the Court to infer that Qualcomm has current market power—based solely on events that pre-date 

the fact discovery cut-off and speculation as to what might have happened afterwards. (Id. at 3-

4.) But the cellular industry did not stop just because fact discovery ended. If the FTC intends to 

Case 5:17-cv-00220-LHK Document 933 Filed 11/07/18 Page 2 of 7
2 Qualcomm’s Response Brief in Opposition 

to the FTC’s Request 

Case No. 5:17-cv-00220-LHK 

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try to prove that Qualcomm “stifles competition in markets for modem chips” today (ECF 928 at 

1), Qualcomm ought to be allowed to defend itself by presenting real-world evidence of today’s 

market conditions. And for the Court to give proper consideration to the FTC’s request for a 

forward-looking Section 13(b) injunction, the Court needs actual evidence of current market 

conditions—rather than outdated speculation about how the market might now, or will, look. 

Instead of addressing this key substantive issue, the FTC focuses almost entirely on 

process. The FTC leads off with the red herring of what it refers to as “bifurcation”, but that is 

not what the Court asked the parties to brief. As reflected in the Court’s October 24, 2018 Case 

Management Order (ECF No. 922), the issue is whether the Court will consider evidence of 

events occurring after the close of fact discovery. How the Court chooses to do that—whether at 

trial or afterwards—is a separate question subject to the Court’s discretion. The FTC says it will 

not oppose “briefing the scope of remedy either post-trial or following a decision on liability” 

(ECF 928 at 2 n.1), but that would not solve the problem if, as the FTC urges, such briefing 

excludes relevant evidence just because it came into existence after the close of fact discovery. 

Under the FTC’s approach, the Court would still be deciding whether to grant an injunction, and 

what its scope should be, on a stale record—contrary to the requirements of Section 13(b). 

Even as to process, the FTC’s argument is without merit. The FTC concedes that 

Qualcomm made known last year that it intended to rely on evidence of market developments 

occurring closer to trial. In response to the FTC’s argument about “cherry-picking”, Qualcomm 

has made it plain for nearly a year that it would be willing to engage in appropriately tailored 

discovery to address this issue, but the FTC refused to negotiate a process to update the record. 

During the fact discovery period, the FTC objected that it was too early for such discussions, 

stating that it would be unproductive to discuss updating the record “based on events that have 

not yet occurred”. (ECF 378 at 5-6.) The FTC instead posited that the window between 

summary judgment briefing and the final pretrial conference could be an appropriate opportunity. 

(ECF 914 at 15.) But when Qualcomm raised updating the record during this window, the FTC 

complained that it was too late for such discussions and that the parties could not complete any 

Case 5:17-cv-00220-LHK Document 933 Filed 11/07/18 Page 3 of 7
3 Qualcomm’s Response Brief in Opposition 

to the FTC’s Request 

Case No. 5:17-cv-00220-LHK 

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additional discovery before trial. The FTC’s varying ripeness and timeliness complaints are a 

cover for its desire to exclude relevant evidence it deems unhelpful to its case. 

Notwithstanding the FTC’s shifting positions, Qualcomm has diligently updated the 

record by producing additional license agreements to the FTC (including ten agreements 

produced by the end of June 2018, before the end of expert discovery).1

 Further, on June 28, 

2018, Qualcomm served the expert report of its economist Dr. Aviv Nevo, which referred to two 

of the recent 5G agreements. Rather than take Qualcomm up on its earlier offers to provide 

discovery, the FTC made the tactical decision to remain silent until moving to strike that portion 

of Dr. Nevo’s report on August 30, 2018. Then, when Qualcomm again reiterated its willingness 

to provide discovery to address alleged “cherry-picking”, the FTC refused. Having rejected 

Qualcomm’s requests to meet and confer on evidence of events after fact discovery closed, while 

fully aware that Qualcomm intended to rely on such events, the FTC’s now-professed inability to 

take discovery on those events (even if true) is a problem of the FTC’s own making. 

In any event, the FTC exaggerates its claimed need for additional discovery. (ECF 928 at 

3-4.) While the FTC claims it may need “documents and testimony from multiple Qualcomm 

custodians involved in licensing and chip sales, as well as document and deposition discovery 

from third parties” (id. at 3), that is inconsistent with its approach to supplemental discovery in 

the past. When Qualcomm and Samsung signed an amendment to their license agreement in 

January 2018, the parties negotiated a targeted discovery protocol, under which Qualcomm 

produced communications between Qualcomm and Samsung from the files of three custodians. 

The FTC did not serve Samsung with additional discovery requests. 

Although the FTC would like to put the focus on discovery, the key question here is 

ultimately substantive—whether the Court may consider granting an injunction on a stale record, 

without considering material recent events. The FTC seeks essentially a bright-line rule 

 

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 The FTC states that Qualcomm “presumably knew” that these license agreements were under 

negotiation prior to the fact discovery cut-off (ECF 928 at 2 n.3), but it is unclear what the FTC 

believes Qualcomm could or should have done during fact discovery with respect to agreements 

that were still under negotiation and not yet concluded. 

Case 5:17-cv-00220-LHK Document 933 Filed 11/07/18 Page 4 of 7
4 Qualcomm’s Response Brief in Opposition 

to the FTC’s Request 

Case No. 5:17-cv-00220-LHK 

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excluding any facts that happened after fact discovery ended no matter how material.2 But to do 

so would be error. (See ECF 914 at 13 n.16.) Indeed, the FTC itself previously acknowledged 

that the question whether to update the record depended on a variety of factors, including “the 

relevance of the additional discovery”. (ECF 378 at 6.) 

Here, Qualcomm has shown that there have been fundamental factual developments since 

fact discovery closed. The most successful OEM in the world, Apple, no longer buys 

Qualcomm’s CDMA or LTE modem chips, meaning that Qualcomm CDMA and LTE chips 

simply cannot be “must have” products that give Qualcomm anticompetitive leverage during 

licensing negotiations. Qualcomm intends to prove that it does not, and is not about to, have 

power in any market alleged by the FTC. Further, key OEMs have agreed to 5G license 

agreements with Qualcomm at a time when 5G networks have not even come on line, so no OEM 

has any current “need” for a 5G chip from Qualcomm. The FTC speculates—on the basis of no 

evidence whatsoever—that “Qualcomm could have used threats to cut off the supply of chips that 

it is shipping to secure agreements to 5G terms”. (ECF 928 at 3 n.4.) This rank speculation is 

indistinguishable from the FTC’s expert’s assertion that the transition to 5G “may afford 

Qualcomm an opportunity to renew and fortify” its ability to engage in anticompetitive conduct. 

(ECF 877-11 (Report of Prof. Shapiro ¶ 313) (emphasis added).) These guesses and predictions 

from the FTC cannot provide a foundation for the Court to consider a Section 13(b) injunction; 

instead, they demonstrate the need for evidence of what is actually happening in the real world.3

 

The Court cannot assess granting an injunction without considering these material facts that bear 

directly on whether Qualcomm has market power and whether it can impair competition. 

 

2

 It is unclear whether the FTC seeks to preclude only “confidential information” from 

Qualcomm’s “files” (ECF 928 at 3-4) or whether it also objects to witness testimony about recent 

events. To the extent the FTC envisions allowing third parties to testify regarding recent events 

but precluding Qualcomm from doing so, that would be even more unfair. 

3

 The FTC also cites a Qualcomm press release relating to 5G chips, which is dated before the 

close of fact discovery. (ECF 928 at 3 n.4.) The FTC could have taken discovery on this and 

other evidence relating to 5G chips during fact discovery and chose not to. Indeed, the FTC has 

not claimed, let alone attempted to prove, that Qualcomm has market power in any market for 5G 

chips, or even alleged that such a market exists. (See ECF 929 at 4.) 

Case 5:17-cv-00220-LHK Document 933 Filed 11/07/18 Page 5 of 7
5 Qualcomm’s Response Brief in Opposition 

to the FTC’s Request 

Case No. 5:17-cv-00220-LHK 

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Dated: November 7, 2018 

 Respectfully submitted, 

 

CRAVATH, SWAINE & MOORE LLP, 

 /s/ Gary A. Bornstein ___________ 

Gary A. Bornstein 

Yonatan Even 

Worldwide Plaza 

825 Eighth Avenue 

New York, NY 10019 

Tel: (212) 474-1000 

Fax: (212) 474-3700 

gbornstein@cravath.com 

yeven@cravath.com 

Robert A. Van Nest 

Eugene M. Paige 

Justina K. Sessions 

KEKER, VAN NEST & PETERS LLP 

633 Battery Street 

San Francisco, CA 94111-1809 

Tel: (415) 391-5400 

Fax: (415) 397-7188 

rvannest@keker.com 

epaige@keker.com 

jsessions@keker.com 

Case 5:17-cv-00220-LHK Document 933 Filed 11/07/18 Page 6 of 7
6 Qualcomm’s Response Brief in Opposition 

to the FTC’s Request 

Case No. 5:17-cv-00220-LHK 

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Richard S. Taffet 

MORGAN, LEWIS & BOCKIUS LLP 

101 Park Avenue 

New York, NY 10178-0060 

Tel: (212) 309-6000 

Fax: (212) 309-6001 

richard.taffet@morganlewis.com 

Willard K. Tom 

MORGAN, LEWIS & BOCKIUS LLP 

1111 Pennsylvania Ave. NW 

Washington, DC 20004-2541 

Tel: (202) 739-3000 

Fax: (202) 739 3001 

willard.tom@morganlewis.com 

Geoffrey T. Holtz 

MORGAN, LEWIS & BOCKIUS LLP 

One Market, Spear Street Tower 

San Francisco, CA 94105-1126 

Tel: (415) 442-1000 

Fax: (415) 442-1001 

geoffrey.holtz@morganlewis.com 

Attorneys for Qualcomm Incorporated

 

Case 5:17-cv-00220-LHK Document 933 Filed 11/07/18 Page 7 of 7