If that's true, then Nokia will have a hard time convincing the European regulators that approving what Nokia wants is tantamount to giving Nokia the kind of unfair advantage that Nokia accuses QCOM of creating.
Let’s be careful and be precise about what Nokia is asking for and in our use of terms like “unfair advantage.”
First, Nokia is not saying that if QCOM’s royalty rates come down then everybody will go home happy. Nokia is saying that QCOM is not playing by the FRAND rules, which as Nokia interprets things means that Nokia is unable to get adequate reward for all of its “essential” patents.
What Nokia wants is a replay of the GSM royalty structure, where they have a big enough IP ownership stake in the standard that they can pay no net royalties while any more than a few of their competitors do. They are asking European regulators to interpret the concept of FRAND along the lines of patent count and a pooling of interest which would result in a GSM like result for them. They don’t give a damn if QCOM is a net collector of royalties so long as they pay less overall than their direct (i.e. handset manufacturing) competitors do.
Would that confer an “unfair advantage”? Not necessarily. If a few companies working on a standard contribute all the IP without excluding any potential contributors, and companies outside that group are forced to pay a net royalty to manufacture to that standard, then the IP contributors have a fair and valid competitive advantage over late arrivals, non-contributors of IP, etc.
Is that how it went with GSM? I don’t know. According to NOK that's how it went with WCDMA. According to QCOM to say so would be rewriting history.
As discussed here many times, the real issue being played out today is the meaning of FRAND.
QCOM says, in effect, that:
1) it holds the patents which are not matters of choice in the WCDMA standard but are absolutely essential to its implementation;
2) QCOM’s royalty rates for WCDMA were open and negotiated with all but a few parties before the standard was set; and
3) The equality of their licensing fees for WCDMA and CDMA is FRAND.
Nokia, on the other hand, claims its “essential” patents to be just as valuable as QCOM’s and that FRAND requires patent count or some equivalent to be fair to all. Nokia’s hoped for outcome of interpreting FRAND, with their large claimed “essential” patent count, would put them in an advantageous royalty position.
THAT is what’s important to Nokia – paying lower royalties than the competition, which is an important competitive advantage. Nokia only cares about the QCOM royalty rate if they have to pay the same rate as everyone else. |
