November 14, 2005
Another Fine Kettle of Fish - Qualcomm vs Broadcom
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The companies stated that Qualcomm is violating EU competition law and failing to meet the commitments Qualcomm made to international standard bodies around the world that it would license its technology on fair, reasonable and non-discriminatory terms. Absent these commitments, the WCDMA 3G standard would not have been adopted. The companies said that Qualcomm is infringing these rules by:
Qualcomm responded that the allegations are factually inaccurate and legally meritless. They point to the large number of licenses that Qualcomm has granted to a broad range of companies including 5 of the 6 claimants as evidence for their position.
On November 7 Qualcomm filed suit against Nokia for infringement of eleven Qualcomm patents and one patent owned by a subsidiary.
in, the relevant standards. In February 2004 an FTC judge ruled that Complaint Counsel failed to prove the facts they alleged in the complaint and that the legal theories advanced by Compliant Counsel failed to demonstrate that a violation of the FTC Act had occurred.
As Qualcomm states in its latest 10K “Standards Development Organizations (SDO) do not have the enforcement authority or ability to protect intellectual property rights. Today, these organizations generally ask participating companies to declare whether they believe they hold patents essential for compliance with a particular standard or proposed standard and if so, whether they are willing to license such patents on terms and conditions that are fair, reasonable and free from unfair discrimination”. Such licenses are referred to as FRAND (fair, reasonable and non-discriminatory.
It is not clear what assurances or commitments, if any, Qualcomm may have given to various standards organizations. It is not clear if such assurances were made, that they were broken in any way by Qualcomm. It is not clear what recourse if any these SDOs or claimants may have, if indeed the commitments were broken. It is not clear what the potential fallout for the industry will be during and after the lengthy litigation process. Even the cloud of uncertainty may have considerable impact. Qualcomm's stock has risen 36% since the first of July. Broadcom's stock has risen 28% over the same time period. By comparison the NASDAQ stock index has risen a modest 7%.
Another parallelism with the Rambus case is that the companies making charges and allegations are licensees of the target company.
It should be pointed out that the Rambus case is largely well documented history while the Qualcomm case is still in its preliminary stages. No one knows how this will play out over time.
This is a high stakes game. According to EMC World Cellular Information Service, a researcher and publisher of wireless industry intelligence, there will be 2.2 billion mobile phone users or subscribers by the end of 2005 and there will be nearly 3.2 billion mobile subscribers by 2010.
Some Background on Cell Phone Technology
on your service plan there may be additional, often steep, charges.
Governments have assigned certain frequencies for cellular transmission. European phones use the 900 and 1800 MHz bands for some of their older networks and the 2100 MHz bands for their new 3G networks. The Americas operate in the 850 and 1900 MHz bands. In the US the FCC licenses a band of spectrum to a carrier on a regional basis, sometimes leading to a mixture of frequencies for a particular carrier across the nation. Because of this situation cell phones are available that work on multiple banks, so called dual-mode and tri-mode phones.
Cell phones are designed and manufactured by a number of well know companies including Nokia, Motorola, Samsung, LG and Sony. However each phone has software and protocols that are specific to a carrier so that a “Sprint” phone can not become a “Verizon” phone. However, because of federal legislation, one can port the phone number across carriers.
considerable power and had inconsistent levels of service. The second generation was digital with new functionality for paging, e-mail, facsimile, and connection to computer networks at a lower price but still data services were limited to low transmission rates. The main 2G cellular technologies were CDMA, TDMA, PDC and GSM (see glossary below). The third generation, 3G, is targeted at ability to simultaneously carry both high speed data and voice traffic. Possible applications include ability to:
In May 2000 the ITU, International Telecommunications Union, adopted the 3G standard known as IMT-2000, which encompasses five terrestrial operating radio interfaces, three of them based on Qualcomm's CDMA intellectual property. There are two current commercial versions of CDMA2000, namely CDAM2000 1X and 1xEV-DO. Some carriers are deploying 2.5G mobile packet data technologies, such as GPRS and EDGE, as a bridging technology while they wait for 3G WCDMA devices to become more readily available and affordable.
for a two year service commitment. In some cases this is sufficient to make a phone upgrade “free”. The same technologies have applicability for PDA and laptop computers, digital cameras and media players.
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-- Jack Horgan, EDACafe.com Contributing Editor.
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