Nokia and Qualcomm exchange patent currency
Recognising that patent portfolios carry huge exchange currency, used as a lever for negotiating equitable deals, Nokia and Qualcomm have agreed to settle their long running patent disputes and bury the hatchet. Nokia will also transfer some of its patents, while paying an upfront license fee and future royalties, covering a broad range of Qualcomm’s patents. What are the implications of this? Read The Chilli Perspective (courtesy of The Chilli RED, the premium service from The Chilli).
Advertisement
Incorporating current and future standards
Nokia and Qualcomm have entered into a new agreement covering various standards including GSM, EDGE, CDMA, WCDMA, HSDPA, OFDM, WiMAX, LTE and other technologies. The agreement will result in settlement of all litigation between the companies, including the withdrawal by Nokia of its complaint to the European Commission.
Limited to a 15 year deal
Under the terms of the new 15 year agreement, Nokia has been granted a license under all Qualcomm's patents for use in Nokia's mobile devices and Nokia Siemens Networks infrastructure equipment. Further, Nokia has agreed not to use any of its patents directly against Qualcomm, enabling Qualcomm to integrate Nokia's technology into Qualcomm's chipsets. The financial structure of the settlement includes an up-front payment and on-going royalties payable to Qualcomm. Nokia has agreed to assign ownership of a number of patents to Qualcomm, including patents declared as essential to WCDMA, GSM and OFDMA. The specific terms are confidential.
“We believe that this agreement is positive for the industry, enabling the market to benefit from innovation and new technologies,” said Olli-Pekka Kallasvuo, CEO of Nokia Corporation. “The positive financial impact of this agreement is within Nokia's original expectations and fully reflects our leading intellectual property and market positions.”
“I'm very pleased that we have come to this important agreement,” said Paul Jacobs, CEO of Qualcomm. “The terms of the new license agreement, including the financial and other value provided to Qualcomm, reflect our strong intellectual property position across many current and future generation technologies. This agreement paves the way for enhanced opportunities between the companies in a number of areas.”
The Chilli perspective
The companies recognise that long running patent disputes covering the whole plethora of standards from the ubiquitous GSM to upcoming WiMAX, WCDMA, HSDPA and LTE could be quite costly, in terms of not just financial costs but also management time, attention and diversion, not to mention the damage caused by constant negative PR from a long drawn out battle . This would have had a negative effect on Nokia’s image of being a leading innovator –affecting how consumers see Nokia’s products and services with consequent impact on future sales. Common sense has finally prevailed at Nokia senior management.
One interesting point to observe is that the agreement is limited to 15 years only. Reading behind the lines, either Nokia expects other competing technologies to have taken over from existing legacy technologies or more likely, Nokia, is hoping to achieve its long term strategic goals by then, of moving away from being a low margin, low ASP, high logistics, high headcount, organisational behemoth, into a more agile, platform software, applications and services orientated strategy and structure, customised to suit different geographies and markets.
Although billed as an equitable agreement, Qualcomm, has come up trumps, in winning its battle to defend its high maintenance (at least legally) patent portfolio. Not only does it get a large upfront license fee, and future royalties, but also strengthens its current portfolio by adding some of Nokia’s assigned patents to its portfolio.
This will strengthen Qualcomm’s calling card, and negotiating position with other handset, chipset and telecoms equipment vendors, both for existing technologies, standards and future standards based on OFDM (orthogonal frequency division modulation) technologies. At the end of day, we can now add Qualcomm to Intel and Microsoft, as the three monolithic juggernauts. Whether, these would be detrimental to the long term strength of the US technology sector remains to be seen.
The advice for start-ups is to find other greener pastures; as the famous African saying goes, “When elephants start to fight, its is the ants that get trodden and killed.”
Comments on this story? Send an email to the editor: address - editor [@] thechilli.com
 |
|
|
© Chilli Publishing Ltd 2008 |
24 JUL 2008 |
