Six Telecom Cos Complain To EU Over Qualcomm Patents
DOW JONES NEWSWIRES
October 28, 2005 8:49 a.m.
BRUSSELS -- Six major telecom companies Friday filed complaints to European regulators against Qualcomm Inc. (QCOM), accusing the U.S. company of breaking antitrust law in its licensing of mobile phone patents.
The companies are Broadcom Corp. (BRCM), LM Ericsson Telephone Co. (ERICY), NEC Corp. (NIPNY), Nokia Corp. (NOK), Panasonic Mobile Communications and Texas Instruments Inc.(TXN).
In a statement, the companies said Qualcomm tried "to exclude competing manufacturers of chipsets for mobile phones from the market and preventing others from entering." Qualcomm refused to license essential patents on "fair,reasonable and nondiscriminatory terms to offer lower royalty rates to handset customers."
In addition, the companies accused Qualcomm of charging "excessive and disproportionate" royalties for the third-generation mobile phone patents. The specific accusation is that Qualcomm charged the same royalty for its WCDMA 3G handset technology as it does for CDMA2000 3G handsets "despite the fact that Qualcomm has contributed far less technology to the WCDMA 3G standard than it has to the CDMA2000 standard."
"Major telecommunications equipment companies on three continents are standing up and saying that that Qualcomm's business practices are unfair, anticompetitive and ultimately illegal," said David Dull, Broadcom's Senior Vice President.
The European legal offensive builds on U.S. litigation. Broadcomm has filed an antitrust suit on similar grounds against Qualcomm in a New Jersey court, accusing the company of misusing industry standard-setting processes and patents on cellular technology. Qualcomm has said that suit is meritless and it may pursue retaliatory legal action.
"Broadcom's unfortunate preference for the litigation forum rather than the negotiating table will require Qualcomm to proceed with litigation of its own," Louis Lupin, Qualcomm's senior vice president and general counsel, told Dow Jones Newswires in July.
Since then, Qualcomm has gone ahead and filed the suit. The battle over Qualcomm cuts to the heart of many crucial issues for the mobile phone industry.
"Qualcomm is charging excessive and disproportionate royalties," said Kasim Alfalahi, Ericsson's Vice President of intellectual property licensing and patents. "There are rules of law that apply to the licensing business and patentees and other intellectual property rights owners cannot ignore them," added Ilkka Rahnasto, Nokia's Vice President of intellectual property rights.
Asian and American companies joined in the complaints. "Qualcomm's anti-competitive licensing practices and excessive royalties are resisting innovation," complained Botaro Hirosaki, NEC's senior vice president.
"If this conduct goes unchecked, the risk is that consumers in Europe and around the world will pay higher prices for mobile phones and services and have less access to innovative products," said Joe Hubach, Texas Instrument's general counsel.
The European Commission said it has received the accusations from the mobile phone makers about Qualcomm. "We will examine the complaints carefully to see if there has been any violation of E.U. competition rules, spokesman Jonathan Todd said.
The Commission now must decide whether to open a formal probe. If it goes ahead, it can force Qualcomm to change its licensing practices, and if merited, fine the company up to 10% of its annual turnover. In March, 2005, the Commission fined Microsoft Corp. (MSFT) a record EUR497 million for abusing its Windows monopoly.
Maurits Dolmans, a Brussels-based lawyer representing Nokia, said Friday that the mobile phone case is "similar to the complaints against Microsoft, but will be easier to prosecute because Qualcomm has broken licensing agreements."
Qualcomm was not immediately available for comment. |
