If this doesn't lift the fog off the heads of those who still think Nokia does not have any credible CDMA program, then we are not dealing with rational people here and that requires the countermeasures queued under the heading: rude awakenings.
Before that, however, here are some other easily verifiable facts for the diligent investor:
1) The IMT-2000 family of standards include 2 TDMA standards and 3 CDMA standards -- CDMA2000, WCDMA (TDD version), and WCDMA (FDD version). Below is IQ's explanation of the difference between TDD and FDD. QCOM's CDMA2000 is a FDD technology, by the way.
.....In reality, TDD is better suited to pure data transfer, due to the fact that uplink and downlink resources can be dynamically assigned to accomodate the bursty nature of data transfer. In FDD you dedicate part of the spectrum to the forward channel and an equal (symmetrical) part of the spectrum to the reverse channel. Simultaneous forward and reverse transmission is possible in FDD (optimum for voice). TDD allows more efficient spectrum management in a data environment. The initial WCDMA deployment will be FDD, due to the current demand for voice services. In the future, TDD will be used for data primarily due to the spectrum advantages and flexibility that it offers for data or mixed voice/data environments.....
ragingbull.com
2) Nokia's 1999 3-year co-development deal with IDCC is focused on the TDD version of WCDMA. The overall Nokia and IDC deal involves TDMA patents and CDMA patents (including major elements of IDC's trademarked BCDMA, a FDD technology) which include the 5 fundamental TDMA/CDMA patents that QCOM licensed from IDCC in 1994 for $5.5 million and the royalty-free use of 1 QCOM patent. Nokia and IDC agreed to an initial consideration of $70 million -- $32M in upfront payments and about $3M a quarter booked as engineering services payments -- with a framework for TDMA and CDMA payments at the end of the 3-year deal (2002) and at certain specified milestones. IDC retains ownership of the TDD technology developed with Nokia while Nokia gets royalty-free use of the technology AND one-year exclusivity which gives it a jump on the competition.
3) IDCC's CDMA patent portfolio is built on the foundations of Donald L. Schilling's pioneering work on CDMA. He has a spread spectrum paper trail that goes all the way back to 1960 and he started generating CDMA patents even BEFORE QCOM was issued its first patent in 1989. He has more than 50+ CDMA patents and he has written 12 books on wireless communication. He merged his 3 SCS companies with IDC in 1992 because according to various accounts, he saw that TDMA/GSM was gaining momentum and that broadband CDMA was eventually going to be built over TDMA/GSM networks. It is important to note that his work on broadband CDMA (later trademarked as BCDMA for the fixed wireless version) always contemplated the use of wider spreads than was available in the early 90s and this is reinforced by the fact that Schilling was also a major contributor to the development of PCS in North America. Note also that QCOM licensed those 5 CDMA patents from IDC in 1994 with the explicit provision that QCOM could not use those fundamental patents over 10 MHz.
4) Schilling left IDC in 1996 shortly after the 1995 pre-Markman Motorola loss and started Golden Bridge Technology.
At GBT, he continue to break new ground in the various component technologies of the broadband CDMA system he developed and refined at SCS and IDC.
5) Hughes was IDC's first TDMA licensee. ATT (with Lucent) licensed IDC's TDMA/CDMA patents in 1994. ATT (without Lucent) started working with GBT in 1997 and entered into a broad licensing agreement with Golden Bridge in 1999. Note that Schilling is the common denominator in both licensing agreements. Note also that his work at GBT builds heavily on the foundational work -- in terms of structure and in terms of components -- that he started at SCS, advanced at IDC and taken yet another step further in some components, some of which involves some intriguing elements of what 4G might look like.
gbtwireless.com
From a 1/99 GBT press release:
By way of background, AT&T Labs and GBT led the technical specifications of a 3G packet-oriented system in the USA within TIA's TR46.1. This resulted in the acceptance and production of the Wireless Multimedia and Messaging System called WIMS W-CDMA. WIMS was submitted to ITU as an IMT2000 proposal in June 1998. Later, GBT encouraged the convergence of WIMS with the proposal from T1's T1P1.5 called W-CDMA/NA. By January 1999, AT&T Labs, Ericsson, GBT and a number of other companies [including IDC] that had taken part in the standardization process, developed a new joint proposal called Wideband Packet-CDMA. This was the first harmonized document to go forward to the ITU, with GBT's Common Packet Channel offering a unique and powerful North American solution to IMT2000.
6) All these connections become even more significant when you consider that Nokia, which many believe will grab 40% of the early 3G market in Japan and Europe, apparently has a limited but exclusive right to the TDD technology developed with IDC. This article estimates that exclusivity to be around 1 year and given Nokia's increasing mastery in coordinating the global supply lines required to support an industry that will soon be shipping a billion handsets a year, that lead may be more than enough for Nokia to widen its lead and establish an Intel-like dominance over the competition.
7) And........the kicker. IDCC held its shareholders' meeting yesterday. Apparently, not only has IDCC asserted its rights under TIA rules for elements of IS-95 (CDMAOne) as disclosed in the QCOM 10K; but, it is also asserting that it has certain IPRs in CDMA2000. This, combined with QCOM's lack of TDMA IPRs, should be enough to lay to rest this nonsense that QCOM can block the rollout of WCDMA in Japan and Europe while it has unsettled IPR issues with its own CDMA2000. Besides, the point that keeps on being made by people with no choice but to use common sense -- a point that tends to get lost in the repititive and montonous QCOM chatter -- is that QCOM will eventually drop its posturing and deal if only to preserve its ability to get into the WCDMA chips business. Note that the WCDMA and GSM/WCDMA chip segments are expected to be the earliest volume rollouts over the next 3 years. Again, if a company has no TDMA IPRs then that company also has no WCDMA chip business, no GSM/WCDMA chip business, no TDMA-EDGE/GSM/WCDMA chip business etcetera, etcetera....unless it comes to its senses and strike a reasonable deal with the companies that matter.
Foundations of 3G: IPR: A balanced approach to IPR
Can intellectual property claims arising from 3G technology be resolved outside the courts, or are the lawyers destined to be the main beneficiaries once again? Julian Bright reports on how one company is approaching the issue.
Suppliers of mobile equipment could be facing substantial royalty claims for the technology they want to include in their next generation products. As 3G and its intermediate technologies are implemented worldwide, levels of investment in new products will be running high.
Volume production of handsets is expected to be around 500 to 520 million this year (Dresdner Kleinwort Benson), and by 2005 - even at a conservative estimate - the figure is likely to be around 1 billion. These handsets and the systems that support them will incorporate elements
from a range of standards, including GSM, CDMA and TDMA. This could mean open house for IPR claimants with patents in the 3G arena, and possibly a field day for the lawyers.
Despite the amicable resolution of Ericsson's differences with Qualcomm last year, following a dispute that generated some acrimonious exchanges throughout the industry, it would be dangerous to conclude that co-operation rather than confrontation might be the preferred way forward. Many holders of IPR will themselves be players in a market where suppliers face keen competition. Others, who depend in larger part on revenue streams from royalties, will want to maximise their return on investment in R&D.
WAP IN DOUBT
Barely had the dust settled on the Ericsson/Qualcomm confrontation, when a surprise claim by Geoworks that it holds essential IPR for WAP and its associated wireless markup language (WML) led to further consternation, with some observers questioning the future of WAP itself.
The latest twist in the Geoworks claim is the announcement that the company is seeking licensing of its technology on "fair, reasonable and non-discriminatory terms and conditions,"in line with the IPR protocol laid down by the WAP Forum, of which Geoworks is a member. "Our objective is to handle technology royalties in a businesslike manner,"
said Don Ezzell of Geoworks. The company has also joined North America's Wireless Data Forum.
If companies such as Geoworks can exercise their IPR claims without recourse to litigation, a great deal of time and expense will have been saved.
One company that has found a way around the problem is InterDigital Communications, which expects to benefit from its own IPR, especially in CDMA. Like Qualcomm, which focuses on chipset development and garnering royalties from its CDMA patents, InterDigital's focus and key expertise is in developing rather than manufacturing products based on
CDMA technology. This means primarily chipsets, and creating and patenting solutions for 3G systems.
"Our strategy is to grow as one of the leading developers of advanced air interface and full system on a chip technology for the wireless industry, with an emphasis on wideband CDMA," says Rip Tilden, executive VP
communications and strategic planning for InterDigital.
Nevertheless, licensing the company's intellectual property worldwide is an important part of the equation, especially in W-CDMA. "We want a revenue annuity stream from licensing," says Tilden. "The margins in that are 90 per cent. That is an important part of the model," he adds.
CO-OPERATIVE AGREEMENT
Finding a way to settle claims without recourse to the law can avoid long drawn-out and expensive litigation. Since 1993 InterDigital itself has been embroiled in an ongoing dispute with Ericsson over royalties for Ericsson's alleged use of InterDigital's patented TDMA technology.
Failing an out of court settlement by the two parties, this dispute is unlikely to go to a hearing until 2001, by which time the technology will have been overtaken.
However, when it comes to W-CDMA development, InterDigital has managed a compromise solution with Nokia that allows both companies to benefit from ongoing research. As a pre-requisite, Nokia has acknowledged a past infringement on InterDigital's TDMA technology, and has paid it $31.5 million in royalties.
Following this settlement the two companies have embarked on a collaboration to develop TDD technology for Nokia 3G products. On conclusion of the project, InterDigital will retain ownership of the technology, but has agreed to allow Nokia exclusive use for a pre-defined period of something less than one year.
The TDD technology under development is ideal for asymmetric data services over short distances, and will be deployed for applications such as wireless LANs, and to create wireless hotspots for large packet data transfers, such as internet and file access. InterDigital's other major development activity is in the development of frequency division duplex (FDD) systems, where it plans to sell its 'system on a chip' ASIC to producers of handsets.
Revenues from InterDigital's previous patents in areas such as TDMA have been patchy, amounting to just US$252 million for the six years to 1999.
By comparison, in fiscal year 1999 Qualcomm's Technology Licensing division, which develops and patents CDMA technology and generates fees and ongoing royalties from the worldwide sales of CDMA phones, chipsets, infrastructure and test equipment, recorded revenues of
US$0.45 billion.
InterDigital's Tilden admits that the company largely withdrew from collaborative TDMA work, and gained a reputation in the industry of being purely a 'tax collector'. Yet, although the company lost another IPR
claim against Motorola in 1995, it now has 21 licencees worldwide for its TDMA technology. Today the approach on W-CDMA is very different. "The expectation is that we can begin to ramp up revenues over the next 18 months, and then have an accelerated opportunity for growth as we begin to sell chips," explains Tilden.
How successful the company will be in establishing an IPR revenue stream from its 3G development remains to be seen. According to senior VP, Brian Kiernan, InterDigital holds patents in key areas for W-CDMA, such as power control, dynamic channel allocation, and node synchronisation. The revenue payment arrangements that the company envisages for its W-CDMA patents will also be differently structured from
those for TDMA, with licencees being asked for a smaller upfront contribution, but with regular royalty payments commencing at an earlier stage.
ESSENTIAL IPRs
To demonstrate its involvement in W-CDMA, InterDigital is a committed participant in standards bodies such as 3GPP, the ITU, ETSI, ANSI and ARIB. Such involvement also has its benefits. The company is careful to file its patent applications before declaring its research to the standards
committees, but will then often move for these to be adopted into the standard.
The aim is to establish essential IPR (patents that are incorporated into an industry standard), which are potentially more valuable than those that only claim to have a commercial benefit to other companies (commercial IPR). "The standards bodies will require compulsory
licensing if the patent impacts a particular technology," points out Robert Kelly, a lawyer with Washington-based Squire, Sanders & Dempsey, adding that "few patents are really highly valuable, and those are likely to be issued first."
>From InterDigital's point of view, as others have found, it clearly makes sense to work from within trade associations and industry standards bodies if you want your intellectual property to be acknowledged. Whether that means a litigation-free rollout of 3G is another question.
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