"We have never believed that Nokia's patents are applicable to our products." LL.
psylent,
<< To split hairs, is Altman right that both NOK and Q are now infringing? ... That would be my interpretation. Qualcomm is espousing the opinion that the agreement has been extended tacitly via Nokia's option, but certainly Nokia doesn't agree, as evidenced by their recent infringement lawsuits against Qualcomm. >>
Although Nokia doesn't agree that the 2001 license has been extended, I'd interpret that differently as it applies to Nokia's infringement counterclaims against QUALCOMM.
Qualcomm has filed 11 suits against Nokia. The 1st 9 in the US, 4 European countries, and China, are for alleged infringement of claimed of "essential" QUALCOMM GSM patents, and QUALCOMM GSM patents weren't covered by the agreement. QUALCOMM had declared none in 2001 when the agreement extension was struck, and so far as we know QUALCOMM never sought licenses for its claimed GSM patents which they began declaring in mid-2004 before that date, and never asserted them until 2005 against Broadcom 1st (July), then Nokia (November). The only GSM license they have announced is the 2007 Nortel license update, and Intel manufactures no subscriber equipment and has virtually no remaining GSM infra business other than upgrades.
The last 2 QUALCOMM v. Nokia US infringement actions are for non-essential QUALCOMM implementation patents. Nokia's 2 infringement actions brought in response to QUALCOMM's actions in US District Courts are also for non-essential Nokia implementation patents (BREW, MediaFlo, direct conversion, etc.) as is the ITC action.
Nokia has not yet asserted any of its 125+ declared essential CDMA patents, its declared GSM essential patents in 184 patent families, its patents declared as essential to both GSM and WCDMA in 54 patent families, or its patents declared essential to WCDMA/HSPA in 219 patent families (as of 2005 end and undoubtedly larger now).
Both QUALCOMM and Nokia are being rather circumspect in advancing claims of infringement of essential CDMA, WCDMA, and GSM patents (unilaterally in the case of QUALCOMM multi-mode chips) covered by the 2001 license while arbitration plays out.
<< To split hairs, is Altman right that both NOK and Q are now infringing? ... That would be my interpretation. >>
It is my interpretation as well, The current bi-lateral license is expired. There is arbitration in process that may decide, retroactively, that the license has been extended due to some action of Nokia, but that does not change the fact that at the moment there is no license between the parties.
I think we need to turn to the language of QUALCOMM's SEC Filings and this from the last 10K ...
We have a license agreement with Nokia Corp., which in part expires on April 9, 2007. While the parties have been in discussions to conclude an extension or a new license agreement beyond that time period, there is no certainty as to when we will be able to conclude an agreement or the terms of any such agreement. There is also a possibility that the parties will not be able to conclude a new or extended agreement by April 2007. In that event after April 9, 2007, unless and until the existing agreement is extended or a new agreement is concluded, Nokia’s right to sell subscriber products under most of our patents (including many that we have declared as essential to the CDMA, WCDMA and other standards) and therefore Nokia’s obligation to pay royalties to us will both cease under the terms of the current agreement, and our rights to sell integrated circuits under Nokia’s patents will likewise cease under the terms of the current agreement.
As for Lupin's bravura statement, which doesn't exactly contradict the above ...
"We have never believed that Nokia's patents are applicable to our products."
... I suppose he is entitled to say that, but it is rather innocuous, meaningless, and to call a spade a spade I consider it to be both unrealistic and uncalled for. This from an individual (me) and about an individual (Louis Lupin) who in my personal opinions about QUALCOMM executives that I've never met in person, but have carefully listened to in webcasted presentations, I developed greater respect for than QUALCOMM Inc's current President, Steve Altman.
Being the supra-capable, intelligent, and wise individuals they obviously are, it is highly unlikely that Irwin, Paul, Sanjay, or Bill, have ever believed that Nokia's patents are not applicable to QUALCOMM products.
That said, Lou's statement above wasn't one of his most inspired. Obviously, neither was his "no-downside" comment that Judge Rudi Brewster choked on when he read the morning San Diego paper a month or so ago. Should Lou be gone? Yes. Every bit as much as an ol' favorite of mine from he late 60's morning radio days (but not later), Don Imus, deserved to be exiled into oblivion after his Rutger's "nappy headed hos" comments if not before. Should other QUALCOMM execs or staff be gone? Maybe. There is, however (I think and hope), enough quality on the QUALCOMM management team and the non-executive board to act sensibly and judiciously.
A patent that is declared as essential to a collaboratively developed interoperability standard is not necessarily essential to that standard. Without question essential patents are over-declared and that was the most important point made in the original FRI "Goodman Meyers" study. The second most important point was that if an essential patent is judged to be essential by an authorized authority (which the 'Goodman Meyer's panel was not) any company manufacturing 'equipment' in the applicable category (subscriber equipment, infra, ICs) without a license would from the patent holder, of necessity, would be infringing the patent.
Declaration of essentiality is simply an obligatory first step. A declared essential patent is only essential if it is validated and then certified to be essential by a sanctioned authority, and neither QUALCOMM or Nokia have submitted a single GSM, WCDMA, or CDMA, patent to a properly sanctioned certification authority. The likelihood, however, is that if they did, a healthy percentage (greater than 10%) of each other's declared essential patents would be judged essential and certified as such. My personal opinion is that QUALCOMM or any other company would find that invalidating (and avoiding infringement of) 100%, 90%, or even 80%, of Nokia's declared essential patents on multiple continents to be not just an Herculean exercise but nigh impossible.
Bottom line: Qualcomm and Nokia are now technically infringing numerous of each other's patents ... BUT neither is asserting those patents against each other, to their credit.
Negotiation is ongoing. Arbitration is ongoing. Sensible minds could prevail. Sensible minds should prevail. Two mobile wireless industry leaders could and should resume normal business sooner or later. When (not if) they do, the wireless industry will be well served. Ideally each considers that they have achieved a win-win when resolution is achieved, and nothing festers. Ideally, as the result of their engagement, the two parties find common ground to mutually develop areas of common interest.
Some opinion here, some fact, and some rambling, in a post I did not initially expect to turn our to be this long in response to your very short post.
In this post I deliberately attempted to avoid over-use of IMO. I credit most of my board colleague's and fellow QUALCOMM longs that participate on this board, with the capability to differentiate one from t'other -- fact from opinion -- and to condone expressed opinions that may be different than their own.
BTW: I'm working on an answer to your 40% WCDMA global revenue sales question and I will respond when I'm comfortable with my response. A preliminary answer is probably. About 13% of global unit sell-in but still very high ASP as compared to GSM and CDMA.
Best to you and all,
- Eric - |
