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Photo illustration: Avishek Das/SOPA Images/LightRocket via Getty Images

Qualcomm isn't harming competition when it forces device makers to license its technology in order to use its chips, a federal appeals court ruled Tuesday.

Why it matters: The decision, which comes from a three-judge panel in California's Ninth Circuit, tosses out a 2019 district court ruling that cast uncertainty around Qualcomm's business model and therefore the future of the smartphone industry.

Catch up quick: Qualcomm has long used the practice, commonly known as its "no license, no chips" policy, to lock smartphone makers into paying for patent licensing before they can use Qualcomm chips.

  • The Federal Trade Commission in the waning days of the Obama administration sued Qualcomm over the practice, saying it hurt competition and amounted to an abuse of the firm's market power in the smartphone chip industry. That set in motion the court case leading to Tuesday's ruling.
  • The policy was also at the heart of a years-long legal battle between Qualcomm and Apple that the companies settled last year.

What they're saying: "Anticompetitive behavior is illegal under federal antitrust law. Hypercompetitive behavior is not," said Judge Conseulo Callahan, writing for the panel.

"Our job is not to condone or punish Qualcomm for its success, but rather to assess whether the FTC has met its burden under the rule of reason to show that Qualcomm’s practices have crossed the line to 'conduct which unfairly tends to destroy competition itself.' ... We conclude that the FTC has not met its burden."
— Judge Callahan
  • "The Court of Appeals unanimous reversal, entirely vacating the District Court decision, validates our business model and patent licensing program," Qualcomm general counsel Don Rosenberg said in a statement.

Qualcomm shares rose roughly 5% on the news.

What's next: Should it choose to pursue the case further, the FTC could ask the full Ninth Circuit to review the panel decision. It could also seek to take it all the way to the Supreme Court.

  • "The court’s ruling is disappointing and we will be considering our options," FTC Bureau of Competition director Ian Conner said in a statement.

Go deeper

Trump campaign loses yet another legal challenge in Pennsylvania

The president's lawyer Rudy Giuliani (center) has led legal efforts to cast doubt on election results, but few have succeeded. Photo: BRYAN R. SMITH/AFP via Getty

Philadelphia did not violate the law by restricting poll observers' proximity to ballots, the Pennsylvania Supreme Court ruled in a blow to the Trump campaign Tuesday.

Why it matters: This development comes after President Trump's defeat in a string of court battles, which his campaign wielded in several states in attempts to discredit President-elect Biden's election victory.

3 hours ago - World

Map: A look at world population density in 3D

This fascinating map is made by Alasdair Rae of Sheffield, England, a former professor of urban studies who is the founder of Automatic Knowledge. It shows world population density in 3D.

Details: "No land is shown on the map, only the locations where people actually live. ... The higher the spike, the more people live in an area. Where there are no spikes, there are no people (e.g. you can clearly identify ... the Sahara Desert)."

Biden's Day 1 challenges: The immigration reset

Illustration: Aïda Amer/Axios

President-elect Biden has an aggressive Day 1 immigration agenda that relies heavily on executive actions to undo President Trump's crackdown.

Why it matters: It's not that easy. Trump issued more than 400 executive actions on immigration. Advocates are fired up. The Supreme Court could threaten the Deferred Action for Childhood Arrivals (DACA) program, and experts warn there could be another surge at the border.