I’m finally going to chime in on all this discussion of what-is-FRAND and everything else that has come out of perusing Broadcom’s antitrust complaint and QCOM’s defense and counterclaims.
Let’s talk about Broadcom first. Fussing over whether it was OK for QCOM to offer Broadcom the same deal as Zyray and whether this violates FRAND, thereby making QCOM a villain, is like asking how many angels can dance on the head of a pin. It is pointless – close to a year ago QCOM offered a nonexhaustive royalty-free cross license. Cash too.
What more could Broadcom ask for? Perhaps one can construct a reasonable theory that damages brought about by the time it took to reach the last offer were greater than the cash offered. OK, fine. Past that, how can Broadcom’s failure to sign a nonexhaustive royalty-free cross license be anything but failure to negotiate in good faith? They would be free and clear to define their own subscriber unit license agreement (SULA) with any handset maker they choose. What disadvantage do they carry?
Now let’s take a step back and note that any license between Broadcom and QCOM is a license to make chips. It is not a SULA, and that is a very important distinction the discussion here has seemed to overlook. Why is this important? Because interpreting FRAND can depend upon what market the license is for.
As noted above, the Broadcom license is about the chip market. Nokia needs a SULA. FRAND in the chip market means reasonable competition can occur between chipmakers. By all measures the terms offered to Broadcom seem to allow this.
I would argue that FRAND for a SULA is a different beast. It should promote good competition between phone makers. QCOM established, well before the WCDMA standard was finalized, that its SULA position was to charge equal license rates regardless of the CDMA flavor. What theory allows QCOM to demand this rate, regardless of a handset maker’s IP or a few patents that may be off the table? Because QCOM does not compete in the handset market, it can effectively set the rules there for use of its IP without violating antitrust concepts. One can argue that offering different terms to any handset maker would be unFRANDly. As QCOM has stated many times, their policy promotes competition – the nominal goal of antitrust law. If QCOM were in the handset business it might be different. But they aren’t. I, at least, reject the notion that FRAND, by definition, applies strictly to an IP tug-of-war between two individual parties, and believe it must be viewed in a market context. |
