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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 175.25+0.6%Dec 19 9:30 AM EST
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To: carranza2 who wrote (139752)10/31/2005 4:57:56 PM
From: Art Bechhoefer  Read Replies (1) of 152472
 
Not knowing how the law treats the difference in royalties when someone buys a QCOM chip, as opposed to buying someone else's chip, it is difficult to determine if there is a legitimate case here. Do you know if the law simply allows a firm to charge what the market will bear? Seems to me that if the QCOM chip is too expensive, competitors will offer their own versions, even if customers pay a little extra in royalties (percentagewise) than they would if they bought a handset with a QCOM chip.

If there is a case here, it might have something to do with royalty rates being different for different customers. The only difference I know of regards the lower royalty rate paid by Chinese suppliers on phones sold in China, and the higher rate paid by Chinese suppliers on phones sold outside of China. So, would the complainants in the recent suit attack that deal as well?

One way out of the mess would be for QCOM to adopt a uniformly low royalty rate for everyone (including the Chinese, possibly), and then increase the licensing fees. On the other hand, I have never seen any law that requires a specific royalty rate. Bottom line, it seems to me, is simply that the chip suppliers want a lower royalty rate. Is that a legitimate cause of action in a lawsuit?

Art
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