Qualcomm agrees to pay $75M in all-cash deal to settle licensing suit

Judge asked to green-light payout to shareholders over SEP license and bundling claims

Qualcomm investors say if the company stumps up $75 million, this should resolve lawsuits they brought over claims the chipmaker misled them by describing its sales and tech licensing businesses as separate concerns, artificially inflating the share price at the same time.

The lead plaintiffs in the consolidated litigation yesterday filed a preliminary motion for preliminary approval of an all-cash settlement [PDF] with the US District Court for the Southern District of California in San Diego. The document requires the thumbs-up from Judge Jinsook Ohta before further movement on any settlement can happen.

According to the court filing, those mistatements include that Qualcomm refused to license its standard essential patents to competitors of its chipset business, and that the company kept its licensing and chip sales business separate, despite it being alleged to have bundled the two together in negotiations and agreements.

The lead plaintiffs say they are pleased to have reached an agreement to settle the court action in exchange for a payment of $75 million in cash, describing it as a "favorable result, particularly given the significant risks of this litigation."

The court filing notes that since the original complaint was filed, Qualcomm has successfully defeated nearly every other related action, with the US Court of Appeals for the Ninth Circuit ruling that Qualcomm's business practices at issue complied with the competition laws, reversing a district court's earlier decision.

It also notes that the EU General Court reversed the European Commission's findings that Qualcomm's chip-selling practices to Apple had anti-competitive effects.

In fact, the court filing claims that the settlement, if approved, will be the first time any US plaintiff "has achieved any recovery from Qualcomm in any of the proceedings related to the alleged anti-competitive conduct at issue."

The plaintiffs had claimed that the price of Qualcomm's stock, which they allege was artificially inflated, had declined following the announcement of enforcement actions and a lawsuit brought by Apple. According to Reuters, this fell 13 percent on the first full trading day after Apple started its litigation.

But following the announcements that Qualcomm had defeated the numerous cases and reversed other decisions, the company's stock price rose again, erasing any losses suffered by investors that had retained their Qualcomm shares during the whole process, the motion for approval states.

Qualcomm and the other defendants assert that these developments disprove the allegations and vindicate the chips and telecoms company and its business practices.

A proposed schedule for settlement would see a Settlement Hearing on October 4, with November 15 the deadline for submitting claim forms by the plaintiffs.

We asked Qualcomm for a comment regarding this latest development, and will update if we get a response. ®

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