Gus, I have copied your entire post below and have responded to each (supposedly positive) claim you have made.
Let me add that the record is clear that much of "the flaming and posturing" has been provoked by Qualcommers who can not tolerate the notion that CMDA rests on the foundation of spread spectrum technology that has been around since the 1940s and 1950s -- public domain foundations, in other words -- because then that would mean that there are alternative paths that cast serious doubts about QCOM's ability to impose its royalty regime on the rest of the industry while it only has 10% of the global market.
I have never heard of a "Qualcommer" that has a problem with the notion that Qualcomms work is based upon earlier work. New technology is always based upon older technology.
The fact that IS-95 is built upon earlier work does not diminish the value of QCOM's IPR. Ericsson realized this when they wisely settled with Qualcomm last year. Until then Ericsson and others claimed W-CDMA could be implemented without Q's technology.
It doesn't help that the counterintuitive nature of CDMA technology lends it tremendous intellectual appeal but that kind of appeal really doesn't rise much beyond the level of pretentions unless one is willing to look at the unassailable facts about IDC's BCDMA technology and why it represents one significant alternative path to 3g.
I was under the impression that W-CDMA and/or CDMA2000 were the most widely supported proposals for 3G and that B-CDMA was a technology limited to stationary applications. Besides, didn't I hear that Siemens was pulling out of the B-CDMA development? If so, why would they do that if it is indeed the future?
That is why an effort is being made here to un-complicate the history of CDMA by distinguishing between spread spectrum, QCOM's narrowband CDMA and IDC's broadband CDMA.
That's very noble but it is important to not present the facts selectively. For instance, QCOM has developed many CDMA technologies, not just IS-95 which, in it's various incarnations (all compatible) have already been successfully deployed and are in widespread use.
Initially, Qualcomm planned to deploy CDMA in a bandwidth of 3Mhz-5Mhz but that was reduced to 1.25Mhz to fit in the spectrum slices that were commonly available in the U.S. A common misconception on IDC investor boards is that broadband somehow escapes Q's IPR.
Qualcomm has not limited their work to "narrowband" at all, contrary to IDC investors repeated attempts to create an uncrowded niche for IDC.
This is more than just a theoretical exercise because Nokia is clearly using IDC's broadband CDMA building blocks to complement its own R&D and product development. One thing about Nokia: it can lose the infrastructure sale, but it can still make money out of the initial handset sale or the handset upgrade sale. One estimate out there is that Nokia will get 40% of the early 3g WCDMA market in Western Europe and Japan.
It's not clear to me that Nokia is or isn't using IDC's IPR in their product development. Even if they are, no royalties will be collected unless the products are commercialized so that is what you should be focusing on.
Sure, IDC claims IPR in all 5 modes of the 3G proposals, Qualcomm claims otherwise. I don't know what the answer is and I doubt anyone here will know until the agreements are reached or it is settled in a court of law. If you have convincing evidence otherwise, post it here.
All one has to do is look at the list of IDC patents dating back to 1973 and IDC's SEC filings to see the evolution and reduction to practice -- Ultraphone -- of IDC's TDMA patents.
Now were talking TDMA IPR's? It was my impression that other manufacturers had entered this market and cut prices to the point that it was unprofitable for IDC. Was it ever profitable? Was the competition able to compete without infringing upon IDC's patents? Who knows, IDC might have some TDMA IPR that is being infringed upon but previous rulings have not been favorable. This time could be different, I just don't know. I suppose a win against Ericy could provide quite a windfall but that is not a given. Maybe Ericy will make an offer to settle this once and for all for a one-time payment like Qualcomm did in 1994. The strength of IDC's position is not very clear-cut.
Similarly, all one has to do is look at the sterling credentials of Donald L. Schilling and his patents at SCS and IDC to see the evolution and reduction to practice -- Truelink -- of IDC's broadband CDMA patents. Truelink, by the way, is the core of the Samsung/IDC fixed wireless project in the Guandong province of China.
Now we are talking CDMA IPR but it is for fixed wireless. That's good for WLL and other local network installations but it's not clear that IDC's technology could not be bypassed by manufacturers and royalties avoided altogether. Certainly royalties couldn't be set very high or operators could choose to deploy a "IS-95 like" WLL without any payments to IDC.
Qualcomm says they can implement their version of wideband CDMA without infringing. Sure, it might be a bluff but I have seen nothing to indicate it is. Another possibility is Q's HDR and 1xrtt both of which may be able to be deployed inexpensively without payment to IDC under the '94 IDC/Q agreement. HDR provides 3G data capabilities in a 1.25Mhz channel.
Instead of throwing a hissy fit, a Qualcommer might benefit from the simple exercise of drilling down the references of the 5 patents that were the subject of a 1994 cross-licensing agreement between Qualcomm and IDC that resulted in QCOM paying $5.5 million to IDC for IS-95 use ONLY while IDC, which acquired rights to certain QCOM patents in that same agreement, continues to flatly declare in its SEC filings that it doesn't need to use QCOM patents to implement broadband CDMA.
Are you sure the agreement didn't also clear the way for Qualcomm to implement HDR andd 1xrtt without IDC making claims? Where did you find the agreement? I have only seen IDC's 10-K SEC filing that says:
In return for a one-time payment of $5.5
million, ITC granted to Qualcomm a fully-paid, worldwide license to use and
sublicense certain specified and then existing (but excluding defined
after-filed and/or granted) ITC CDMA patents (including related divisional and
continuation patents) to make and sell products for IS-95-type wireless
applications, including, but not limited to, cellular, PCS, wireless local loop
and satellite applications. Qualcomm has the right to sublicense certain of
ITC's licensed CDMA patents so that Qualcomm's licensees will be free to
manufacture and sell IS-95-type CDMA products without requiring any payment to
ITC. Neither ITC's patents concerning cellular overlay and interference
cancellation nor its current inventions are licensed to Qualcomm. Under the
settlement, Qualcomm granted to InterDigital a royalty-free license to use and
to sublicense the patent that Qualcomm had asserted against InterDigital and a
royalty-bearing license to use certain Qualcomm CDMA patents in InterDigital's
B-CDMA products, if needed. InterDigital does not believe that it will be
necessary to use any of such royalty-bearing or non-licensed Qualcomm patents in
its B-CDMA system. In addition, Qualcomm agreed, subject to certain
restrictions, to license certain CDMA patents on a royalty bearing basis to
those InterDigital customers that desire to use Qualcomm's patents. The license
to InterDigital does not apply to IS-95-type systems, or to satellite systems.
Certain of Qualcomm's patents, relating to key IS-95 features such as soft and
softer hand-off, variable rate vocoding, and orthogonal (Walsh) coding, are not
licensed to InterDigital.
The language that defines the technologies that Qualcomm can deploy is quite broad and somewhat vague. Both HDR and 1xrtt fit in a 1.25Mhz bandwidth and are mobile, direct sequence, spread-spectrum CDMA technologies and therefore could be described as "IS-95 type" technologies. Also, satellite and WLL technologies are included. Can you provide a link that shows the Q-IDC agreement is strictly limited to IS-95? Usually an agreement like this will define what is covered in some way beyond "IS-95 type" The agreement specifically allows satellite usage and since it's my understanding that current IS-95 wouldn't work via satellite, obviously this "IS-95 type" technologies is a very broad term. So I suspect HDR and/or 1xrtt and 3xrtt could be covered under the settlement but without further information it is impossible to draw concrete conclusions.
When one is investing real money, it is wise to avoid jumping to conclusions, even if the conclusions suit one's fancy.
Drilling down and cross-referencing those patents will yield...
a) a more realistic understanding of the considerable spread spectrum work done by the likes of defense contractors like Texas Instruments (1977), ITT, Signatron, Harris, and E-Systems;
Work is not rewarded unless it results in enforceable patents that are royalty-bearing. That remains to be seen.
b) how Donald Schilling's work was heavily influenced by a long line of seminal spread spectrum efforts and later on, and only tangentially IMO, by QCOM's own narrowband CDMA work starting in 1989; and most importantly,
Again, enforceable, royalty-bearing patents are the bottom line.
c) a clear record of how IDC has been working on integrating fixed and mobile broadband CDMA into fixed and mobile TDMA systems since the early 90s. This is an important distinction to make since TDMA and GSM (a variant of TDMA) constitute 85% of the global market today and thus the transition from 2g to 3g WCDMA will require basestations and handsets that incorporate both technologies.
Once again, if all this work doesn't result in royalty bearing patents, there is nothing.
Again the point that needs to be made is this: QCOM's 2g CDMAOne and 3g CDMA2000 represent one viable path to wireless voice and data. IDC's 2g TDMA and 3g WCDMA represent another viable path.
IDC has many hurdles to jump over before they can claim ownership and collect substantial royalties on GSM, IS-136, 3g WCDMA, etc. That they worked many years on these technologies tells me very little. As an investor I would want some evidence that the patents IDC does hold are necessary and unavoidable.
Nokia and IDC have been reducing this to practice on a daily basis in various WCDMA trials around the world and that remains an underappreciated fact. At the end of the day, it is the manufacturers and carriers who decide on the most cost-effective upgrade path. My guess is that the decisions will skew more along the lines that will increase the already massive economies of scale in 2g TDMA/GSM or GPRS or EDGE or 3g WCDMA. It goes without saying that 3g WCDMA also means that IPR holders will have to follow the mix-and-match-with-a-cap guidelines of the 3g Patent Platform.
There is a common misconception that Qualcomm has offered a 3G solution that is not a suitable upgrade for GSM operators. Do you think Qualcomm is not keenly aware that most of the wireless world are GSM? I have even seen it suggested that the 3.8Mhz or 4.0Mhz chip rates are somehow backwards compatible with GSM but Qualcomms 3.6Mhz rate and/or 3G CDMA proposals are not! Hogwash! GSM has no chip rate to be compatible with. Any of the 3G air interfaces can be interfaced with packet-based network infrastructure.
You are right, at the end of the day it is the carriers who will decide what to deploy. Of course the most interesting question as an investor is which companies will get the biggest pieces of the various pies. The pressure to eliminate unnecessary royalties will be intense, the negotiations and possible legal disputes will be lengthy. I want my bets on a company with a successful history of negotiating sizeable royalties and on the company that I know beyond a reasonable doubt holds essential IPR's that are substantial. I also want to be sure they have the resources to carry through and the management skill to guide the process. It's o.k. that we disagree on which company fits the bill. Maybe they will both win but when it comes to real money, I don't like "maybe's"
Bux |
