Why this Case Matters
In Qualcomm Incorporated v. Barroqueiro, 2025 BCCA 65 ("Qualcomm") the Court of Appeal for British Columbia provided clarity that the mere existence of an agreement with harmful effects is not sufficient to satisfy the act element of a conspiracy claim. The harm that results from the agreement must also be the "common purpose" of the parties to the agreement.
In practice, this decision affirms the following requirements for conspiracies under the Competition Act, R.S.C. 1985, c. C-34 and civil conspiracy claims more broadly:
- Pre-March 11, 2010, s. 45: the common purpose of the parties to the agreement must be to limit supply, enhance prices, or restrain competition;
- Post-March 11, 2010, s. 45: the common purpose of the parties to the agreement must be to fix prices, allocate markets, or restrict supply;
- Predominant purpose civil conspiracy: there must be a common purpose between alleged conspirators to harm the plaintiff;
- Unlawful purpose civil conspiracy: there must be a common purpose between alleged conspirators to carry out the unlawful act.
Plaintiffs to conspiracy claims often plead: (1) an agreement with harmful effects was entered between the defendants; (2) the defendants subjectively intended to enter the agreement; and (3) the defendants objectively should have known that the harm would result. Qualcomm instructs this is no longer sufficient. Beyond the harmful effects that result from the agreement, plaintiffs must clearly identify how those effects were the "common purposes" of the agreement.
Background
Qualcomm Incorporated and its various wholly owned subsidiaries carry on business developing and licensing patents for modem chips. Modem chips enable cell phones to connect to cellular networks that conform to the same communication standards and "speak the same language" as the chip itself.
Qualcomm incorporated patents into various generations of cellular communication standards and entered into agreements with modem chip and cellphone manufacturers to set royalties and terms for using the patents. The plaintiffs brought a class action claiming that Qualcomm's actions inflated the price of royalties for licensing its technology and imposed other anti-competitive terms that ultimately harmed a class of purchasers who paid higher end prices for their cellular devices. They alleged price maintenance and conspiracy between Qualcomm and other industry participants (including manufacturers) under the Competition Act, civil conspiracy, the tort of unlawful means, and unjust enrichment.
The motion judge certified the class action for each of these causes of action, and dismissed Qualcomm's summary judgment motion. The motion judge concluded that the plaintiffs pleaded adequate material facts for a conspiracy under s. 45 of the Competition Act and civil conspiracy because they pleaded the existence of agreements, that Qualcomm and its contractual counterparties subjectively intended to enter the agreements, and that viewed objectively, a reasonable person would conclude that the agreements would have the effect of inflating the price of cellular devices, i.e. the alleged harm.
The Court of Appeal upheld the certification order on most of the grounds raised by the plaintiffs but allowed Qualcomm's appeal on the claims in conspiracy. The Court affirmed the requirement for a "common purpose" between alleged conspirators to enact the harm which goes beyond the existence of a mere agreement with harmful effects. This element was missing from the motions' judge's decision.
Analysis of the Conspiracy Claims
The motion judge and Court of Appeal both observed that the plaintiffs pleaded agreements: (i) between Qualcomm and other industry participants to ensure its patented technology would be incorporated into cellular communication standards; and (ii) requiring modem chip suppliers to sell exclusively to cell phone manufacturers who held licenses from Qualcomm. The plaintiffs claimed that Qualcomm thereby acquired market power , restricted the supply of modem chips and inflated the price of its royalties resulting in harm to the class in the form of higher prices for cellular devices.
The Court of Appeal held that it is insufficient to merely plead that Qualcomm had an intention to injure the plaintiffs. That intention also has to be the common purpose of the alleged co-conspirators. There were no material facts pleaded on this point.
The plaintiffs also argued that the alleged co-conspirators would have subjectively known the terms of their agreements with Qualcomm and a reasonable person would objectively have understood those terms to ultimately harm the class members. However, the Court of Appeal observed that in the context of a conspiracy under s. 45 of the Competition Act, subjective intention and objective knowledge go only to the mens rea (mental) element of this offence. An actus reus (act) element is also required. Something more than the existence of an agreement is required. The end of the agreement must also be to fulfill a common purpose that violates s. 45. In this case, the plaintiffs did not plead that any agreement was entered into with the purpose of inflating prices, allocating markets, restricting supply, or any other act prohibited by s. 45. The absence of a common purpose was therefore fatal to the claim.
While different legal tests apply, the Court of Appeal found that the same analysis defeated the plaintiff's civil conspiracy claims. As with a s. 45 conspiracy, the core of a civil conspiracy claim is a common purpose between the alleged conspirators, either that predominantly seeks to injure the plaintiffs or seeks to carry out an unlawful act that has the effect of injuring the plaintiffs. Again while the pleadings alleged an intent to injure by Qualcomm and the existence of an agreement with harmful effects, there were no material facts supporting a common purpose with any conspirators to fulfill those ends. A combination with others is the essence of a civil conspiracy claim and this requires a common purpose.
The Court of Appeal therefore allowed Qualcomm's appeal on these issues and denied certification of the plaintiffs' conspiracy claims.
Other Practice Points
Aside from the focus of the Court of Appeal's analysis on conspiracy claims, Qualcomm also provides guidance on motions to strike and summary judgment motions in British Columbia. The following are worth highlighting:
- Parties should not conflate a motion to strike with a summary judgment motion. A summary judgment motion will only be allowed where the evidence supports that there is no genuine issue for trial. Showing that the pleadings disclose no cause of action is not relevant to a summary judgment motion.
- In British Columbia, an appeal of a motion to strike or the "reasonable cause of action" criterion for class action certification is a pure question of law reviewable on the standard of correctness. This stands in contrast to the Federal Courts where review of an appeal of these motions may involve review for correctness or palpable and overriding error depending on the specific issue engaged: see Jensen v. Samsung Electronics Co. Ltd., 2023 FCA 89.
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