Qualcomm/Nokia Patent War Gets Pushback from the Bench

Sharon Armbrust | February 28, 2007, 06:47 AM

As reported in the Wall St. Journal today, 2/28, an administrative law judge for the ITC (Intl Trade Comm.) overseeing one of the patent disputes between QUALCOMM and Nokia, put a trial scheduled for March 5 on hold, probably signaling his desire that the two sides try again to come to a negotiated out-of-court agreement.

This particular complaint relates to Qualcomm’s claim that Nokia has been infringing on QCOM CDMA patented technology in its GSM phones. Nokia intimated that QUALCOMM’s claim was shrinking as it has reduced its patent infringement claims from six to three over the course of the litigation to date.

This is the 2nd shoe to drop in a week. On Feb. 23, QUALCOMM and Broadcom agreed to drop patent claims for two of five and two of four patent infringements the pair had claimed against each other. The rest of the claims remain open.

But the bigger shadow over an assortment of litigation among Qualcomm, Broadcom, Nokia, Ericcson and others is whether QUALCOMM can migrate its 800 lb. gorilla status in CDMA into coming generations of WCDMA and OFDM protocol technologies. How valuable is its patent portfolio and what can it charge its competitors for same? The GSM vendors have a long-standing complaint at the European Commission claiming royalty overcharges by QUALCOMM for its patents. Its blanket reciprocal patent licensing agreement with Nokia expires Apr. 9 and is still being negotiated.

QUALCOMM ceo Paul Jacobs indicated last week to investors that he was hopeful the GSM carrier Cingular’s recent choice of MediaFlo for mobile broadcast might positively influence the GSM group vs QUALCOMM negotiations, but also noted that mediation is a good possibility.
Most recently, QUALCOMM has posted on its web site a 3rd party critique which claims Qualcomm’s “essential” CDMA patents should be valued and licensed on a simple numeric basis vis a vis all other CDMA patents. The rebuttal paper blasts the idea of relying solely on the number of patents identified as essential for a given set of products and applications and instead recommends a blend of qualitative and quantitative analyses plus historical pricing precendent as more reliable.

The authors include an interesting table which identifies U.S. patents disclosed to ETSI for UMTS standard using data between 1975-2004, comparing simple patent counts, non-self citations received and average non-self citations received per patent for Ericsson, Nokia and QUALCOMM among others. The table highlights the different conclusions one might draw from simply counting a patent vs counting how often it is cited by competitors as essential to a given product vs counting how often each patent in a patent family is cited on average.

Simple Patent Counts
Ericsson 163
QUALCOMM 105
Nokia 53

Non-Self Citations
QUALCOMM 6,528
Ericsson 2,980
Nokia 466

Non-Self Citations/Patent
QUALCOMM 62
Ericsson 18
Nokia 9

There are definitely a few more twists and turns to come before this standoff gets resolved, but the events of the past week indicate the courts may be helping it along. Shares in both QCOM and NOK fell about 2% during the panic trading of 2/27.