On the subject of royalty rates for W-CDMA versus CDMA, I went back and listened to the conference call below. I've transcribed 3 question and answer blocks from the call. I had difficulty with the name of the questioners and their companies, and with a few words (as noted below) in the last answer to Mark Cabi. The rest was fairly easy to understand. The clearest answer is the one to Mary Ann's question.
1999 Conference Call 3/26/1999 44 min. Question and Answer Session with QUALCOMM Management on Developments with Ericsson
Entire event: 1999 Conference Call (44 min.)
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Time Marker: 13:35
[didn't catch name], CIBC Oppenheimer
CIBC: Yes, good morning gentlemen. Back to the royalties, let's talk for a minute as we look into 3G here. When we get to 3G, does the implication forward imply that if you manufacture a W-CDMA phone, that you will pay a royalty to Ericsson and similarly, if Ericsson manufactures a CDMA 2000 phone, that they will pay a royalty to Qualcomm?
Q: As far as the royalties on the different possible modes of operation of the standard, they are uniform across the modes and so any of these royalties that have been discussed apply to CDMAOne, they apply to any of the ones, CDMA modes in 3G, they apply equally to all of those.
CIBC: So then to clarify, just in response to the prior question, you said that you will not pay a royalty to Ericsson on the manufacture of CDMA phones that would then apply to 3G but they will pay you a royalty if they manufacture a 3G phone.
Q: No, that's not what I said. I said that they will pay us a royalty on all CDMA phones that they manufacture, no matter what type that is. We also will pay them a small royalty in the future on phones that we manufacture whether those be CDMAOne, Wideband CDMA, CDMA 2000, whatever.
CIBC: And the one final question, to a future licensee of 3G, will they then have to negotiate with Ericsson and Qualcomm for IPR?
Q: If they buy ASICs from us, then they get the pass-through rights to Ericsson's patents... essential patents. If they do not buy ASICs from us then they will have to talk to Ericsson about any patent portfolio that they have.
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Time Marker: 31:35
Mary Ann Dolan(?), with Plough Scher Capital(?)
Mary Ann: Is there any case in which Ericsson doesn't pay you royalties, I mean if they use a different chip, or if they do something different, I mean is there anywhere they don't pay you?
Q: No, on the handsets again, for CDMA telephones, then regardless of the type, the royalties rates are the same. If there was some completely different technology that we didn't have any patents in, then that would be a different issue.
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Time Marker 34:40
Mark Cabi, CF First Boston
Mark: Congratulations to both companies on a very nice transaction. I was wondering if you could specify how the royalty arrangements will differ between CDMA2000 and W-CDMA between the two companies as third generation systems come about? Have those been determined yet, or are those yet to be determined?
Q: Well again, the royalties with regards to Ericsson and Qualcomm, there's no distinction between whatever modes do come out in the third generation and so if W-CDMA and CDMA2000, or direct sequence and multi-carrier, whatever the details are, the royalty rates are independent (his emphasis) of which of the modes are being used for CDMA and so it's not [that issue, it is solved] (I'm unsure on wording here) between the two companies. It's interesting because there has been some speculation by a number of other companies that they would get different royalty rates, a way to reduce or have no royalty rates in the event of the use of W-CDMA. I think it's quite clear that that may not be a correct assumption. |
