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Phone cloners eye 3G upgrade

It's a real Nokia, honest, and I paid nothing for it

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Nokia is a status symbol in Asia, but as Prada and Gucci have found out to their cost, even when it comes to status symbols, punters will make do with a knock-off.

Now they can get a more authentic knock-off.

Qualcomm has signed a chip agreement with a leading Taiwanese supplier whose chips often find their way into fake Western phones, including Apple and Nokia clones.

MediaTek produces silicon for a number of markets, but the most unusual and interesting is manufacturers of branded imitation 'dual SIM' versions of well known handset designs that were originally produced by top Western manufacturers such as Nokia. The handsets are only sold in the Chinese market, but the occasional one pops up on eBay.

Thanks to the PRC's somewhat selective enforcement of intellectual property laws - the Government tends to turn a blind eye when the infringer is home grown - the fake phone business has grown like topsy. Earlier this year, before Apple officially launched the iPhone into China, our own Rik Myslewski counted no fewer than eight Apple clones. Downstream MediaTek has prospered, now employing over 4,000.

Now Qualcomm has formally given the company wider access to its WCDMA patent portfolio. The additional irony is that Qualcomm is itself an intellectual property company, that owes its success to the successful defense of its innovation. Qualcomm points out that the IP agreement only covers MediaTek and not its customers - they'll need WCDMA licenses too.

Nokia was recently scornful of MediaTek's rapid growth. CFO Rick Simonson said MediaTek make lots of chips, because lots of them failed.

The phones "have a high [number of] quality problems, and you have to do numerous subtractions from the number [of] chips that are supposedly made in MediaTek to get in to the actual devices that are out on the street," he told analysts.

It further highlights the difficulties for Western companies of doing business in Asia - where the local genius for imitation and lax interpretation and enforcement of IP has made fashion and low grade electronics almost impossible to conduct. The best idea is always someone else's.

MediaTek has been in trouble before: in 2004 the MPAA pursued it for including DVD decryption code in its chips, and BT is suing it in the US for patent infringement. MediaTek denies the charge. ®

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