Part 3
In just over five years, over 65 million subscribers covering 35
countries have adopted CDMA technology. Second generation cdmaOne networks
have been widely deployed around the world, including South Korea, the United
States, Japan and throughout Latin America. Third generation cdma2000 1X
networks are planned to enter commercial service in South Korea in 2000 and
in Japan, the United States and elsewhere in 2001. In addition, cdma2000 1xEV
(HDR) trials are planned in South Korea and Japan in 2000. NTT DoCoMo has
announced that an initial version of WCDMA will be deployed in some areas of
Japan in 2001.
QUALCOMM'S PIONEERING ROLE IN THE DEVELOPMENT AND DEPLOYMENT OF CDMA.
Since shortly after its formation in 1985, QUALCOMM has allocated
substantial resources to developing, patenting and commercializing the use of
CDMA technology in wireless communications applications. QUALCOMM's intellectual
property portfolio has been widely recognized as being necessary for cdmaOne,
cdma2000, 1xEV, 1Xplus, 1Xtreme and WCDMA.
QUALCOMM has entered into royalty-bearing license agreements for
CDMA wireless applications with more than 80 major telecommunications
manufacturers, including Ericsson, Fujitsu, Hitachi, Hyundai, Intel, LGIC,
Lucent, Motorola, NEC, Nokia, Nortel, Philips, Samsung, Siemens and Sony. In
addition to license fees, QUALCOMM receives on-going royalties from its
licensees as they sell CDMA products provided that at least one claim of one
of QUALCOMM's licensed patents is being utilized. Moreover, approximately 15
of QUALCOMM's license agreements cover WCDMA applications and require
manufacturers to pay on-going royalties to QUALCOMM in connection with their
sales of WCDMA products, with royalty rates equivalent to the royalties that
are payable by them for cdmaOne and cdma2000 applications. The manufacturers
that have licensed some or all of QUALCOMM's essential patents for WCDMA
applications include: Ericsson, Hitachi, LGIC, Lucent, Matsushita, Motorola,
Nortel, Philips, Samsung, Sony, Sanyo and Toshiba. QUALCOMM expects increased
total licensing and royalty revenues as third generation CDMA standards are
deployed.
QUALCOMM'S INTELLECTUAL PROPERTY ARRANGEMENTS WITH SPINCO
To give Spinco the ability to negotiate cross-licenses, gain
reasonable access to third party intellectual property and defend itself as
may be necessary, QUALCOMM will assign to Spinco a portion of its patents and
patent applications that are essential and/or useful to implement existing
and proposed CDMA standards. Following the spin-off, QUALCOMM's intellectual
property portfolio will consist of more than 1,000 U.S. patents and patent
applications, substantially all of which are essential to or useful in CDMA
wireless applications and some of which have applicability in other wireless
applications (such as position location technology). Because of the terms of
QUALCOMM's license agreements and due to the overall breadth and coverage of
its intellectual property portfolio, QUALCOMM believes that assignment of
patents and patent applications to Spinco will not compromise QUALCOMM's
existing or future licensing business, including the royalties payable to the
Company. In addition to filing for patent protection in the United States,
QUALCOMM has and will continue to actively file for patent protection around
the world and has received CDMA patents with broad coverage throughout most
of world, including China, Japan, Korea, Europe, Brazil, North America and
elsewhere. |
