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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: iggyl who wrote (28815)	11/12/2002 10:08:10 PM
From: propitious7	Respond to of 197027

EC OK to Patent Pact not related to Four Deal on wCDMA iggy The EC approval you reference is to a different patent agreement than the announced agreement of NOK, Ericy, NTT DoCoMo et al. to limit aggregate royalties on wCDMA to <5%. The EC approval relates to a patent pool of Alcatel, Siemens and a bunch of Euro carriers in relation to 3G technology. A patent pool is a classic anti-competitive restraint which may or may not be an illegal restraint depending on the combined market share and preclusive effect of the pool. A pool, as the name implies, is an agreement for parties to put all their IPR into a pool to be shared and used by the pooling parties, usually without royalty. This can be done in a single agreement or in a series of bi-lateral agreements but the effect is the same: I license you if you license me. Any competitor not in the pool may be precluded from entering the market (if the pooled IPR is essential) or may have to get licenses from each company at royalties each will determine. When DuPont and ICI pooled their patents on man-made fibers, the effect was to preclude other companies from getting into the market and to allocate Euro market to ICI and U.S. market to DuPont. When the original six IPR holders for GSM technology pooled their IPR, the effect was to raise a hgh barrier to entry for other prospective producers of GSM handsets and base station equipment. But that was not prohibited by EC. The normal practice where a govt or supra-govt entity like EC establishes a mandatory technical standard such as GSM is to require that all holders of IPR license any applicant at a royalty fixed by law or regulation to permit some compensation to the IPR holder without precluding competitive entry. In EC then, and now with wCDMA, the only regulation is a requirement that each IPR holder commit to license its IPR for a "reasonable royalty and conditions". EC has been much criticized for anti-competitive effect of this laissez faire attiude towards pooling, hence their review of the sharing agreement you refer to. It is worth noting that the agreement of the Gang of Four to offer licenses for an aggregate royalty <5 is the opposite of a patent pool; their agreement is distinctly pro-competitive as it offers to any prospective entrant access to the IPR of all four players at a royalty which is fixed and (appears to be) the same for all. If this cap is ridiculously high, then the agreement will have no effect because no one will take up the offer. But that means agreement is ineffective but not harmful. If the cap is reasonable, then new entrants benefit and competition is enhanced. propitious