2000 Analyst Conference Call 2/17/2000 -- Selected Transcribed Bytes -- W-CDMA
Note: I've transcribed the segments below from the conference call. The sound quality is not the best but after transcribing, I listened 2x again to check it for accuracy. So, no guarantee on every word, but it's close.
Entire event: 2000 Analyst Conference Call (240 min.)
Steve Altman (in charge of the Licensing Division)
Time mark: 3:12:00
We have over 1,100 issued or pending patents in the United States, and of course we file those around the world. There is no other remotely comparable CDMA patent position; and I say that as it relates to DS CDMA, MC CDMA, any other CDMA proposed that's out there. And I think that's reflected both in the existing license agreements that we have, and will be reflected in all future license agreements that we enter into.
There's been, I guess recently, some questions about our position on the 3G CDMA standard, specifically what's referred to as DS, previously known as W-CDMA. We have informed the standards bodies that we have more than 100 patents that are essential to W-CDMA. And, what is meant by "essential" is that based on how these specifications are written, one cannot design a product that complies with that standard without necessarily infringing our patents, which means that companies will necessarily have to sign license agreements in order to deploy products based on that standard.
Many industry groups and companies have actually come to us and asked us to join -- I actually received a number of questions about this yesterday -- what they call a "patent pool". And the concept there was, "Hey, let's take everybody's patents, through them into a pool, agree to charge a maximum royalty, and then we'll share that in some predetermined fashion." And of course, everybody that doesn't have essential patents wants to join that pool so that they can gain access to the companies with the strong patent positions. We've had no interest in joining that patent pool and we'll continue with our existing bilateral license negotiations.
I also received a number of questions at the cocktail party yesterday concerning certain companies that are raising issues -- of course these are companies that are not already licensed -- but raising issues as to whether or not Qualcomm has patents for W-CDMA, or stating that they will not be paying royalties to Qualcomm for W-CDMA. And you know, it's funny, as I listen to those questions, I can recall -- deja vu -- I can recall the same questions being asked 2 years ago basically in the context of Ericsson. And I think I received a question at that point that Ericsson was saying that you don't have any patents for W-CDMA, they're not going to paying royalties for W-CDMA. Well, as you can see, what they're saying now, when we finally signed our license agreement with Ericsson, their CEO was quoted in their press releases saying that Qualcomm was a pioneer in developing CDMA technologies. And in our license agreement itself, they stated that Qualcomm indeed has essential patents for W-CDMA. So, they're on record, in the license agreement, agreeing that Qualcomm has essential patents, that they cannot design around, in order to deploy W-CDMA.
In fact I think what you're seeing in fact, is that companies that are not licensed will say these things. They're eventually going to need to get a license, they're going to need to get one with us. We've dealt with these issues in the past. Basically, every license agreement that I've ever negotiated... usually you have a big company on the other side claiming to have a very strong patent position, whether -- even before there was W-CDMA, before there was 3G -- claiming they had very strong patent positions on other features that we would need to gain access to. In each case we, based on the strength of our patent portfolio, negotiated very favorable agreements where we obtained cross licenses, and obtained royalty bearing licenses that were... whereby they would have to pay us royalties as they went forward.
Staying on the other, 3G, and in particular W-CDMA, major companies, Lucent, Ericsson, Nortel, Samsung, Philips, and a number of others are licensed today to do W-CDMA or DS CDMA, the mode of the ITU standard, proposed standard. And these license agreements require that these companies pay us royalties. And it's the same royalty, whether they sell products for CDMAone, whether they sell the products for MC CDMA, or whether they sell it for DS CDMA. And the other point that I think is important, again, you hear companies publicly stating things, but the fact is, every major wireless telecommunications manufacturer has approached us, and has either negotiated, or requested to obtain terms for a W-CDMA or 3G CDMA standard. And, we'll continue to have negotiations with lots of companies on that, and I think over time you'll start to see more and more companies signing up. I think, the farther away that those products are, the less critical it is that they sign licenses. As it starts to come closer to deployment, there's more pressure on these companies to, in fact, sign up.
Time mark: 3:21:50
A major point earlier. Royalties are paid by licensees, regardless of the CDMA standard, and they're the same royalties. And I think that's an important point to continue to stress. Also, royalties are the same if the licensee uses one claim of one patent. The way our agreements work, we generally license a very broad number of our patents that exist on the date we sign an agreement, and then any patents that we file for during what we call an "improvement period" -- typically improvement periods are 5 to 10 years -- and what that means, as long as CDMA is being deployed, and as long we can demonstrate that one claim of one patent applies, we'll get the same royalty as if we were to prove 1,000 patents apply. The other think I thing this shows, it reflects really just how strong our patent portfolio is, because companies wouldn't agree, if our portfolio wasn't strong to simply say I'm going to pay the same royalty if you can find just one claim. And so it's not worthwhile trying to fight that battle. |
