## Facts

- Broadcom and Qualcomm competed in cellular telephone chipset markets involving CDMA and UMTS/3G technologies.
- Cellular interoperability depended on private standards-determining organizations (SDOs) that often required participants to disclose relevant patents and commit to license essential patents on fair, reasonable, and non-discriminatory (FRAND) terms.
- Broadcom alleged Qualcomm intentionally deceived SDOs by making FRAND licensing commitments to induce adoption of Qualcomm technology into the UMTS/WCDMA standard while lacking intent to honor those commitments.
- Broadcom alleged that after standard adoption made Qualcomm’s technology essential, Qualcomm refused to license on FRAND terms and used that position to demand supracompetitive royalties and restrictive terms (a “patent hold-up” theory).
- Broadcom further alleged Qualcomm leveraged dominance in CDMA to coerce manufacturers into purchasing Qualcomm’s UMTS chipsets.
- Broadcom also challenged Qualcomm’s acquisition of Flarion Technologies as a means to extend monopoly power into future technology standards.
- The district court dismissed the complaint under Rule 12(b)(6); Broadcom appealed.

## Issues

1. Whether a patent holder’s intentional deception of an SDO regarding FRAND commitments can constitute exclusionary conduct actionable under § 2 of the Sherman Act.
2. Whether Broadcom adequately pled monopolization and attempted monopolization based on alleged deceptive FRAND conduct and post-standard licensing practices.
3. Whether Broadcom had antitrust standing to pursue a monopoly-maintenance claim in a market in which it neither competed nor sought to compete.
4. Whether Broadcom alleged antitrust injury sufficient to state a § 7 Clayton Act claim challenging Qualcomm’s acquisition of Flarion.

## Decision

- The Third Circuit affirmed in part, reversed in part, and remanded.
- The court reversed dismissal of Broadcom’s § 2 monopolization and attempted monopolization claims, holding the complaint plausibly alleged exclusionary conduct through intentional SDO deception and resulting standard-based market power.
- The court affirmed dismissal of Broadcom’s monopoly-maintenance claim for lack of antitrust standing where Broadcom was not a participant or potential participant in the relevant market.
- The court affirmed dismissal of the § 7 claim challenging the Flarion acquisition for failure to plead antitrust injury, finding the alleged harms too remote and speculative.

## Legal Principles

- Intentional deception of an SDO about patent licensing commitments, coupled with later refusal to license on promised FRAND terms after standard adoption, can constitute actionable exclusionary conduct under Sherman Act § 2 at the pleading stage.
- Standard setting may create or increase market power because interoperability requirements and switching costs can make alternatives effectively unavailable once a technology is incorporated into a standard.
- Monopolization requires allegations of monopoly power in a properly defined market and willful acquisition or maintenance of that power through exclusionary conduct rather than competition on the merits.
- Attempted monopolization requires allegations of anticompetitive conduct, specific intent to monopolize, and a dangerous probability of achieving monopoly power.
- Antitrust standing requires a direct antitrust injury; a plaintiff generally cannot pursue monopoly-maintenance claims for markets in which it neither competes nor seeks to compete.
- A § 7 Clayton Act challenge requires plausible allegations of antitrust injury from the acquisition; speculative or hypothetical future harms are insufficient.

## Conclusion

The Third Circuit allowed Broadcom’s core Sherman Act § 2 claims to proceed based on alleged intentional deception of SDOs concerning FRAND commitments and subsequent standard-based “hold-up,” while rejecting other claims for lack of antitrust standing and failure to plead antitrust injury from the challenged acquisition.


Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir. 2007)