Monday, July 21, 2008

WSJ article raises issues with Qualcomm patent policies

An article in the WSJ begins with the words "Are Qualcomm, Inc.'s patent royalties an unfair tax on cellphone makers?" There is also mention of Qualcomm's obligations to a European standard setting group, obligations not being fulfilled according to Nokia. A US trial between Qualcomm and Nokia begins on 23 July in the Delaware Court of Chancery, which hears business disputes.

This is a "big deal" case. InformationWeek notes that the case will be webcast:

Interest in the case -- which could involve hundreds of millions of dollars, even billions -- is so intense that the case will be televised by Courtroom View Network via Webcast. Sources said the service will be available at a charge beginning at $400 and that financial institutions including hedge funds have been signing up for the service. The proceedings will be available online for 30 days for subscribers.

Jaffe and Lerner, in Innovation and Its Discontents, praised the patent policies of Qualcomm. Since that time, Qualcomm Inc. was sanctioned and six of its former lawyers faced investigation by the State Bar of California for failing to turn over thousands of documents in a patent infringement trial against rival chip maker Broadcom Corp.

The evidence of the "reality disconnect" of Jaffe and Lerner on patent issues is mounting.

Qualcomm does have arguments, although not the kind depicted by Jaffe and Lerner. Reuters noted the following:

“If it was such a bad deal, why did they negotiate so hard to extend that deal?” Qualcomm Vice President Bill Davidson asked Reuters. “If it was a good deal when it was 50 patents, it's an awfully good deal now that we have 7,000 patents (to license).”

One analyst said Nokia faced an uphill battle in Delaware because other cell-phone makers had agreed to pay 5 percent of the cost of their cell phones to Qualcomm to use the technology.

“The difficulty Nokia has got is that 90 other members of the industry agreed to this. They have agreed to pay the 5 percent,” said Francis Morrison, a lawyer for Axinn Veltrop and Harkrider LLP.

See also

The Magnitude of the Jaffe/Lerner Patent Misunderstanding Examined

Qualcomm sanctioned $8.6M on 7 Jan 08; lawyers referred to State Bar


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