On the Rationality of Bundled Rebate Program in Modem Chip Industry: an Analysis on Qualcomm’s Case

Youqiong Ai () and Thomas Y. Lu ()
Additional contact information
Youqiong Ai: Fudan University
Thomas Y. Lu: Washington University in St. Louis

Journal of Industry, Competition and Trade, 2019, vol. 19, issue 4, No 5, 660 pages

Abstract: Abstract This paper examines the motivations of a patent holder, for example, Qualcomm holding many standard essential patents (SEPs) on modem chips, to implement a bundled rebate program for its customers, Apple for instance, under the risk of violating antitrust law. This study originates from the lawsuit between Qualcomm, Federal Trade Commission (FTC), and Apple. In early 2017, both FTC and Qualcomm’s customer, Apple, sued Qualcomm for violating antitrust law. Qualcomm was alleged to have manipulated “web of contracts” by implementing so-called no license, no chips policy to achieve its anticompetitive purpose. By addressing the case law of antitrust regime related to bundled rebate and loyalty discount, we understand legal risks that Qualcomm might face. Moreover, in this paper, we build a game-theoretical model to explore business reasons why Qualcomm insists on implementing the bundled rebate and loyalty discount program, regardless of latent legal risks. It is shown that Qualcomm might desire to mitigate future loss from price war with potential competitors. Finally, this article concludes with expectations for future studies on the impact of the Federal Court if SEPs and modem chips cannot be bundled together.

Keywords: Bundled rebate program; Patent licensing; Modem chip industry; Law and business (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s10842-019-00311-6 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jincot:v:19:y:2019:i:4:d:10.1007_s10842-019-00311-6

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/10842/PS2

DOI: 10.1007/s10842-019-00311-6

Access Statistics for this article

Journal of Industry, Competition and Trade is currently edited by Karl Aiginger, Marcel Canoy and Michael Peneder

More articles in Journal of Industry, Competition and Trade from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().