Qualcomm this week called in the American Arbitration Association, to help with its dispute with Nokia, saying that continued use of patents in Nokia’s CDMA cellular handsets after April 9, 2007 constitutes an election by Nokia to extend its license under the parties’ existing agreement.
If the Arbitration agreed with this point, to the extent that such a US only association had power over a global deal, Nokia might be obliged to pay what it has been paying in the past, instead of the revised $20 million payment that Nokia has made to Qualcomm last week for its quarterly royalties.
Qualcomm says it is also seeks a ruling that it is entitled to terminate all of Nokia’s rights and licenses under the agreement if Nokia sues Qualcomm for patent infringement after April 9, 2007. How does that work? If you sue me for your rights, I have the right to throw all my toys out of the pram, but you don’t.
Nokia has specifically stated that it has a lot of patents that are essential to both CDMA and UMTS technologies, not to mention the MediaFLO technologies which Qualcomm is just launching as a service in the US, which has a huge similarity to DVB-H. Nokia has said that if it cannot reach an agreement with Qualcomm on a deal to swap patents, and pay some contribution to Qualcomm, then it would sue for the cessation of the use of its own patents. We’re not quite sure why an American Arbitration Association would have the right to force a non-US company not to pursue its rights under international law.
Qualcomm insists that Nokia has no right to set royalties unilaterally and that Qualcomm’s own licensing program for WCDMA is well established and that fair market value of Qualcomm’s patents has been established by the more than 70 royalty-bearing license agreements.
Nokia issued a statement this week that it has never paid more than 3% aggregate license fees on WCDMA handset sales under all its patent license agreements under all the numerous patent license agreements applicable to its WCDMA handsets. The suggestion is that Qualcomm is calling for more than that. In reply Qualcomm says that Nokia is getting cute with the figures because some of that royalty is in trade off against its own and in total comes to far more than 3%.
Nokia also insists that it has a fully paid up license covering Qualcomm’s early patents which no longer need paying for and that it only needs an agreement for Qualcomm’s newer patents.
Sitting in the middle you get the impression this is about brinkmanship and that both are quite good at it, but that at some point we all need to get back to work and get mobile networks working. The truth is that Qualcomm has made a huge contribution to global radio technologies, and so has Nokia, but only one of them relies on Intellectual Property as a main driving force behind its existing profits and so that is the only one of the two at risk. It might look like Nokia is at risk, but it can resume payments at any stage and be no worse off than it was previously. Which is perhaps why all US analyst discussion over the past two weeks is all about downside for Qualcomm.