Original URL: http://www.theregister.co.uk/2007/06/01/qualcomm_vs_the_world/
Qualcomm IPR gravy train hits the buffers
Biter bit
Posted in Mobile, 1st June 2007 03:12 GMT
Free webcast: Service level monitoring and management
Comment Qualcomm had yet another setback in the courtroom this week, as Broadcom was awarded $19.64m in damages for incorporating Broadcom technology in its baseband chips and software.
The award came from a Jury trial in the US District Court in Santa Ana, California, which also found that three Broadcom patents are valid and that Qualcomm's infringement was willful, allowing the court to increase the damages up to three times the amount awarded by the jury. Broadcom will now ask the court for an injunction barring Qualcomm from further infringement of the three patents.
"We are very pleased with the jury's verdict, and gratified that the jurors were able to absorb and evaluate very technical material and arrive at the conclusion that Qualcomm once again is improperly utilizing our patented technology covering cellular baseband solutions," said David Dull, Broadcom's Senior Vice President and General Counsel. The first of the three patents relate to a single chip being able to talk to two separate wireless networks, and the jury found that Qualcomm used the multimode invention in its EV-DO baseband chips.
A second patent relates to a particular chip architecture for video processing and the jury found that Qualcomm used this architecture on its enhanced multimedia chip platforms.
The final patent was about how the same chip can work on both fixed and variable bandwidth networks, which is embedded in Qualcomm push to talk QChat software.
In December the US International Trade Commission (ITC) found that Qualcomm's 3G cellular baseband chips infringe a Broadcom patent related to power-saving technology and a decision on the remedy for that infringement is imminent.
In January a court threw out a complaint by Qualcomm which claimed that Broadcom was improperly using patents which are embedded in the H.264 codec standard. That court found Qualcomm had waived its right to enforce the patents by the simple act of never mentioning the patents to the standards body which set the standard, and that decision could also backfire on Qualcomm further when that court considers remedies for that omission in June.
There was a patent pool put together for essential H.264 patents which included everyone that helped build the H.264 technology except Qualcomm. The signatories to that patent pooling agreement included Daewoo, France Telecom, the Fraunhofer institute, Fujitsu, Hitachi, Philips, LG Electronics, LSI Logic, Matsushita, Microsoft, Mitsubishi, Samsung, Sharp, Siemens, Sony, Toshiba and JVC to name but a few. H.264 technology is at the heart of devices like iPods, DVRs, set tops, DVD players and where video enabled, cellular handsets.
Broadcom still has a number of anti-trust actions one which failed, but is being appealed in the US, and one filed with other complainants in Europe and another in Korea.
In essence, the tide is turning against Qualcomm’s practice of deliberately manipulating its ownership of key patents within industry standards, and its peculiar licensing approach of licensing all or none of its technology together in a single license, often at rates five or six time that of other patents that are considered essential in the same process.
While all of these court cases give rise to a lot of negative pressure on Qualcomm’s share price, the company continues to perform admirably in its financial results, despite putting aside $200 million to fight court cases, mostly due to its ability to infiltrate new markets, such as HSPA, by getting chip architectures working more rapidly than its rivals.
Increasingly senior executives at the company have heavily hinted that it is prepared, if necessary, to hive off its intellectual property arm under separate arms length management, in order to retain its interest in intellectual property, without it touching its own stock market valuation.
Earlier in the year Broadcom and Qualcomm reached an agreement to set aside their differences, with the exception that each would pursue any legal actions which had already been launched.
While the court cases have no direct bearing on Nokia’s legal argument with Qualcomm, if the intellectual property claims are as weak as they have been shown to be in these court cases, then the huge profit that comes from IPR for Qualcomm could easily be whittled away, virtually overnight with hundreds of other companies expected to chase the same terms as any that Nokia settles on, considering that it is claiming that many of the Qualcomm patents are now exhausted, and that it no longer owes anything for their use, but that Qualcomm will now start to become a net IPR payer in favor of Nokia over royalties and is pursuing that idea further in US and European courts.
Nokia this week said it has responded to the first of the Qualcomm lawsuit filed against it, filed in the Western District of Wisconsin on 2 April saying that it was confident that it did not infringe the Qualcomm patents and added that it thought the patents are invalid.
Nokia also filed patent claims of its own against Qualcomm over six Nokia implementation patents used in Qualcomm WCDMA and CDMA2000 chipsets. Nokia pointed out that these patents were not essential in order to produce a standard product, as many of the Qualcomm patents are thought to be, but they provide substantial benefits when used, so it looks like Qualcomm could get around these patents easily enough, but it would have to redesign its chips if the suit is upheld.
Naturally Nokia returned the compliment and requested the same kind of damages and injunction that Qualcomm asked for in its patents.
"Over the past 19 months Qualcomm has filed 11 patent litigation cases against Nokia seeking damages and injunctions," said Rick Simonson, chief financial officer, Nokia. "Nokia has now filed its first counter action to address Qualcomm's unauthorized use of Nokia technology. We will continue to defend ourselves and exercise all rights according to our extensive IPR portfolio."
The implementation patents cited in the Nokia counterclaim filing relate primarily to multi-band/multi-mode technologies, which allow roaming for consumers, and direct conversion technologies that reduce handset and chipset size, cost and power consumption. They sound remarkably similar to the technical areas where the Broadcom suits hit and the suits may well have been coordinated to cause maximum damage to Qualcomm if successful.
The key difference here is that when Nokia uses Qualcomm technology it is the only beneficiary, but when Qualcomm uses Nokia ideas in its chips, then all of its licensees get the benefit of it, and so potentially a win for Nokia is even more devastating than the simple act of getting less royalties from Nokia.
Copyright © 2007, Faultline (http://www.rethinkresearch.biz/)
Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here (http://www.rethinkresearch.biz/subscribe.asp).