Qualcomm, Nokia Sign Licensing Deal, End Lawsuits

[KumaarShah 143]

Qualcomm, Nokia sign licensing deal, end lawsuits

The 15-year agreement gives Nokia a license to all the chip maker's patents. From Times Staff and Wire Reports July 24, 2008

Cellphone chip maker Qualcomm Inc. and Nokia, the world's biggest maker of wireless phones, signed a new licensing agreement that ends global litigation and resolves concerns about Qualcomm's future licensing program.

The agreement, released after the close of trading Wednesday, sent Qualcomm shares soaring 18% after hours.

The 15-year agreement covers the current and the next generation of high-speed mobile phone standards and gives Nokia a license to all of Qualcomm patents with a promise not to use any of its patents against the San Diego company, the firms said.

"This is one where saying this is important is not an overstatement," said Rick Simonson, Nokia's chief financial officer. "It's a big relief for everybody."

Nirav S. Parikh, senior vice president at Qualcomm investor TCW Group Inc., said the agreement sets the stage for industrywide issues over patents for third- and fourth-generation technologies.

"This also validates Qualcomm's business model far into the future," he said. He expects the company to release details of the settlement today.

Among the legal matters resolved between the two was a Nokia complaint pending before the European Commission. Qualcomm still faces lawsuits involving other companies, notably rival chip maker Broadcom Corp. in Irvine, but the Nokia litigation was considered the most disruptive.

Financial terms weren't disclosed. Nokia will pay an upfront fee and continuing royalties to Qualcomm.

Investors have feared that Qualcomm's inability to reach a new agreement with the Espoo, Finland, handset maker after an earlier contract expired last year could lead to demands for lower fees from other licensees.

"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," Qualcomm Chief Executive Paul Jacobs said.

Nokia's chief executive, Olli-Pekka Kallasvuo, said: "The positive financial impact of this agreement is within Nokia's original expectations and fully reflects our leading intellectual property and market positions."

Qualcomm shares rose 72 cents to $44.82, then gained as much as $8.28 in after-hours trading following news of the settlement.

A deal was signaled earlier in the day when a trial between the two companies in Delaware Chancery Court in Wilmington was postponed and Qualcomm delayed its release of quarterly earnings.

Qualcomm, whose chips power Verizon Wireless and Sprint Nextel Corp. cellphones and networks, among others, gets most of its profit from licensing its patented technology to the carriers and the handset and related original equipment makers.

The company stopped recording sales from royalties paid by Nokia after April 9, 2007, saying it would wait until a judgment or a settlement of its dispute. The company estimated last year that Nokia's royalties in 2008 would produce earnings per share of 25 cents to 30 cents.

Qualcomm and Nokia have sued each other and filed complaints with regulators in Europe, North America and Asia to gain an edge in their licensing battle. The Delaware trial was expected to resolve some licensing issues.

Earlier Wednesday a German court ruled against Qualcomm in a patent-infringement case Nokia had brought. It ruled, as two other international courts had, that Qualcomm's claims related to GSM technology were invalid.

GSM, referring to the global system for mobile communications, is the most widely used wireless standard in the world. Although Qualcomm has some patents related to that standard, its business was built on its near-monopoly of CDMA, or code division multiple access, technology.

After announcing the agreement, Qualcomm reported a fiscal third-quarter profit that fell 6.3% as the company spent more to develop its MediaFlo mobile-television service.

Net income declined to $748 million, or 45 cents a share, from $798 million, or 47 cents, a year earlier. Revenue increased 19% to $2.8 billion for the three-month period that ended June 29.

Link: http://www.latimes.com/business/la-fi-qual...0,6819174.story

[rbdhoot 11]

Now we can expect some good quality handsets for ourselves.

[KumaarShah 143]

Some more links:

1. http://www.bloomberg.com/apps/news?pid=206...&refer=home

2. http://www.informationweek.com/news/manage...cleID=209600139

[kshah 452]

I think they had some patent fight over 3G in GSM (WCDMA). So they might have resolved those problem.

May be this is to fight against TD-SCDMA of china too.

[arnuld 12]

I think they had some patent fight over 3G in GSM (WCDMA). So they might have resolved those problem.

May be this is to fight against TD-SCDMA of china too.

Businessmen fight all the way with each other in every country rather than focusing on innovation and good of the society

[savramesh 37]

Please tell me what does that mean ?

Nokia stops cdma ? or Expands cdma ?

[KumaarShah 143]

Nokia's CDMA Renaissance?

JULY 24, 2008

Nokia Corp. (NYSE: NOK - message board)'s 15-year patent agreement with Qualcomm Inc. (Nasdaq: QCOM - message board) could once again open up the North American market for the Finnish phone giant, analysts suggest.

Since 2005, Qualcomm and Nokia have been sparring over patents and royalty rates related to CDMA and GSM. The agreement announced today between the pair drops Nokia's complaint to the European Commission as well as several lawsuits in the U.S., Europe, and Asia.

Nokia is the No. 1 phone vendor in the world with more than 40 percent market share, but it's been struggling in North America for several years, in part due to a lack of CDMA products. There are two major CDMA carriers in the U.S. -- Verizon Wireless and Sprint Nextel Corp. (NYSE: S - message board) -- and 100 million wireless subscribers using the Qualcomm-developed technology.

"The reason they [Nokia] got out of CDMA in the first place is basically because of the Qualcomm suit," says Jack Gold at J.Gold Associates. "Now they are free to do what they want, where they want."

That could mean low-end CDMA phones in China and India as well as higher-end products in the United States. Analyst Carmi Levy at AR Communications Inc. suggests that next-generation technology, rather than a straightforward re-introduction of CDMA-based products, will be the North American focus.

"I think the CDMA battle in North America is over," he claims, suggesting Nokia will focus on new markets like Verizon's planned 2010 deployment of Long-Term Evolution (LTE) technology. (See Verizon Goes LTE.)

"Verizon is too big for Nokia to ignore," Gold agrees. Verizon has 68 million U.S. subscribers, making it the country's second-ranked cellular carrier.

The patent agreement will still be helpful to Nokia as the market moves towards fourth generation (4G) technology, Levy suggests, because Qualcomm still holds relevant patents there. Most of these relate to orthogonal frequency division multiplexing (OFDM), the radio technology that underpins all 4G networks. (See Qualcomm Buys Into Mobile WiMax.)

Nokia hasn't returned Unstrung's calls about potential new roadmap additions for North America.

— Dan Jones, Site Editor, Unstrung

Link: http://www.unstrung.com/document.asp?doc_id=159982

Edited July 25, 2008 by KumaarShah

[savramesh 37]

"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."

Source: http://www.nokia.com/A4136001?newsid=1238093

[Greatest 55]

this means, newer and better phones from nokia in the cdma platform..!!

[KumaarShah 143]

Why Qualcomm Folded to Nokia

Qualcomm struck a patent deal with Nokia when it seemed a Delaware court wouldn't go its way. So ends mobile's biggest, costliest battle

by Jennifer L. Schenker

The longest running, highest-stakes poker game in the history of the mobile industry came to a surprising conclusion July 23, when Nokia (NOK), the world's largest mobile-handset maker, and Qualcomm (QCOM), the largest chipmaker for cell phones, suddenly agreed to settle their legal battles over intellectual property and royalties, just as a pivotal court case in Wilmington, Del., was about to begin. The accord will have wide-ranging implications for both companies and the future of the mobile sector.

The two sides said they have agreed to drop all legal complaints against each other in the U.S., Europe, and Asia. The companies also struck a 15-year licensing deal that gives Nokia rights to a wide portfolio of Qualcomm patents, covering a wide range of different-generation mobile-phone standards. Nokia will pay Qualcomm an up-front sum and ongoing royalties, but the companies did not elaborate on terms. The Finnish phonemaker agreed not to use any of its patents directly against Qualcomm, allowing the U.S. chipmaker to integrate Nokia technologies into its chip sets. Nokia will also hand over to Qualcomm several essential patents in fourth-generation wireless networking technologies known as Long Term Evolution (LTE) and WiMAX.

The agreement, announced after European markets closed, sent Qualcomm shares soaring 16.82%. (Qualcomm, which was supposed to report earnings July 23, postponed its earnings announcement to July 24). Nokia shares were up 4%, with analysts predicting a number of upsides, including a potential increase in the Finnish phonemaker's U.S. business.

Expensive Struggle

So ended a standoff that crimped the expansion of both companies' businesses, cost each side hundreds of millions of dollars in legal fees and threatened to fragment the mobile industry's approach to fourth-generation services. "It has been a long time but it has been worth it," says Rick Simonson, Nokia's chief financial officer, explaining that the Finnish phonemaker was able to negotiate a much lower royalty rate than the one it was paying when a licensing agreement between the two companies expired in April 2007. He declined to be specific.

Billions of dollars were at stake. "There is a reason this was such a decisive battle," says Ben Wood, director of CCS Insight, a British mobile consultancy. "If you are striking a 15-year agreement and Nokia is making half a billion mobile handsets every year, even a fraction of a percentage point has massive implications for both sides."

Qualcomm will benefit immediately by receiving a lump sum in royalties—likely more than $1 billion for the past year. Just in calendar year 2009, the royalties could add about 30¢ per share to Qualcomm's earnings, boosting them from $2.50 to $2.80, says Mark McKechnie, an analyst with American Technology Research.

San Diego-based Qualcomm, which gets about two-thirds of its profits from licensing fees on its patents, has been refusing to accept payments from Nokia ever since the contract it had with the phonemaker expired 15 months ago, preferring to defer hundreds of millions of dollars in royalties until a new bargain was struck.

Patent Payments

At issue was how much Nokia—and the rest of the industry—should pay to license Qualcomm's patents (BusinessWeek.com, 10/17/07) for third-generation mobile technology. When 3G mobile standards were being developed about a decade ago, the San Diego company held key patents on the underlying technology, known as W-CDMA, that were adopted by the industry. Qualcomm agreed to license those technologies to other companies on reasonable terms, and, as a result, its patented inventions became an integral part of 3G.

But Nokia argued that the royalties Qualcomm demanded were too high relative to the value of the company's patents, and teamed up with a half-dozen other tech firms to try to force Qualcomm lower. The Finnish company filed a number of lawsuits and, two years ago, asked the European Commission's antitrust division to investigate Qualcomm's licensing fees. In their original complaint, Nokia, Broadcom (BRCM), Ericsson (ERIC), Texas Instruments (TXN), NEC (6701.T), and Panasonic Mobile Communications (MC) alleged that Qualcomm overcharged for its intellectual property and had used potentially abusive techniques to prolong its dominant position in mobile-phone technology. On July 23, Simonson said Nokia will drop its EU complaint. "Seeing as Nokia was the driving force for this complaint, we think that this will effectively end the EU complaint of the other plaintiffs," said a research note from Richard Windsor, a mobile analyst at brokerage Nomura (NMR).

What led to the breakthrough just hours before the trial in Delaware was about to begin? On July 23 a German federal patent court ruled that a Qualcomm GSM patent asserted against Nokia was invalid, the third consecutive court to conclude that Qualcomm's patent claims against Nokia were without merit. Britain's High Court and the U.S. International Trade Commission also rejected Qualcomm GSM claims. But it was the Delaware case that was the most important in the dispute, deciding the key issue of W-CDMA royalties. Analysts speculate that Qualcomm may have settled because it feared it wouldn't win that one, either.

Qualcomm was effectively asking for a royalty rate of about 4.5% of the phone's average selling price, an amount "which is fairly crippling in an industry with operating margins of 5% to 15%," according to a research note from mobile-industry analysts in the London office of Dresdner Kleinwort. Nokia wanted to pay less than 3%. "With almost the entire industry on the side of Nokia and with the principles of FRAND (Fair, Reasonable, And Non-Discriminatory) terms being widely accepted by almost all industry players for the longer-term well-being of the industry itself, we believe that the legal argument may have been in Nokia's favor," the research note said.

Eleventh-Hour Deal

Pressed on what led up to the last-minute agreement, Simonson says it came as a surprise to Nokia. "It was unlikely and unpredictable," he says. "We all happened to be in Wilmington, Del., and when there was movement we were well prepared and it came together."

The legal battles were taking a toll on Nokia and Qualcomm's businesses, say analysts. One of the disputes led to a temporary ban on importing handsets containing the San Diego chipmaker's technology into the U.S. And Nokia's court battles with Qualcomm have adversely affected the Finnish phonemaker's CDMA business and its dealings with U.S. wireless carriers, says CCS Insight's Wood. "Psychologically, U.S. carriers were very worried about dealing with Nokia while the patent dispute was raging, and it was almost impossible for Nokia to deliver mobile phones for CDMA networks without working with Qualcomm," says Wood. "The agreement will help Nokia's efforts in North America, which is their Achilles' heel right now."

Nokia's Simonson says, and analysts agree, that the end of the disputes between Nokia and Qualcomm will also boost the industry's efforts to advance fourth-generation mobile networks.

The agreement could also put pressure on other companies, such as Texas Instruments and Broadcom, to settle with Qualcomm.

One downside for Qualcomm: If Nokia has obtained a discount on royalties, analysts say other big mobile handset makers such as Motorola (MOT), Samsung, and LG may demand a similar cut.

With Olga Kharif

Link: http://www.businessweek.com/globalbiz/cont...0724_646345.htm

Edited July 25, 2008 by KumaarShah

[KumaarShah 143]

Qualcomm Aids Nokia's American Dream

Lionel Laurent, 07.24.08, 1:45 PM ET

LONDON -

Nokia was rubbing its hands and looking forward to improving its position in North America on Thursday, shortly after announcing a new 15-year agreement with Qualcomm that ended a long-running legal battle over industry-standard patent infringements.

"This does remove barriers [in North America] that up until yesterday were absolutely there," said Nokia's chief financial officer, Rick Simonson, in an interview with Forbes.com. He said that Nokia would now be able to take advantage of Qualcomm's wireless CDMA-standard technology in the United States, but would not comment on how much of a market-share boost this could represent.

Shares in Nokia (nyse: NOK - news - people ) closed up 3.5%, or 60 euro cents (94 cents), to 17.56 euros ($27.52), in Helsinki on Thursday. Qualcomm (nasdaq: QCOM - news - people ) was up 18.4%, to $53.05, during afternoon trading in New York, a sign of how important Nokia's global dominance is for the chip-maker's business.

Nokia has struggled to get a significant lead in the United States, where it has a market share of 10.0%, compared with its slice of approximately 50.0% of Europe and 40.0% worldwide. Now that it has hammered out a new royalty agreement with Qualcomm, it will be able once again to take advantage of the chip-maker's CDMA technology--CDMA being the most common American standard for "third-generation" (3G) mobile data transmission.

"Creating cutting-edge CDMA phones more or less requires close collaboration with Qualcomm," said Pablo Perez-Fernandez, analyst with Global Crown Capital. "Due to various add-ons and tweaks Verizon (nyse: VZ - news - people ) and Sprint (nyse: S - news - people ) are introducing to their CDMA services on a regular basis." He said improving Nokia's foothold in the U.S. was crucial for the Finnish handset-maker, especially with Apple (nasdaq: AAPL - news - people ) and Google (nasdaq: GOOG - news - people ) knocking at the industry's door.

Nokia has also cleverly guaranteed its future survival by making sure the agreement covers future technologies as well, which means that as data transmission speeds approach "fourth generation," there will be greater unity and no chance of patent battles with Qualcomm. However, Nokia competitors like Motorola (nyse: MOT - news - people ) or Samsung may have a battle on their hands: Qualcomm has been awarded ownership of essential patents based on the agreement, so other handset-makers may not get as good a price as Nokia.

"The [new] net royalty rate is lower than the one that expired," confirmed Nokia's Simonson, but he would not give any further details.

It will be interesting to see how an ongoing European Commission complaint against Qualcomm turns out now that Nokia has pulled out of it. In 2005, six companies including Nokia, Broadcom (nasdaq: BRCM - news - people ), Ericsson (nasdaq: ERIC - news - people ) and Texas Instruments (nyse: TXN - news - people ) claimed that Qualcomm was behaving in an anti-competitive way when licensing mobile patents. (See "Qualcomm Licked In Legal Battle")

Link: http://www.forbes.com/markets/2008/07/24/n...4markets25.html

Edited July 25, 2008 by KumaarShah

[KumaarShah 143]

Kissing And Making Up – Nokia and Qualcomm End Legal Tangles With New Agreement

by Daisy Sarma - July 24, 2008

In a step that is to end all forms of legal tangles currently existing between cell phone giant Nokia Corporation and manufacturer of cell phone chips Qualcomm Inc., the two companies have inked a new agreement for the next 15 years.

Not only would the new agreement end of all legal issues currently existing between Nokia and Qualcomm, it would also clear all doubts about future licensing programs that Qualcomm may have entertained. Nokia would also withdraw a complaint it had lodged with the European Commission against Qualcomm.

Earlier in the day, the possibility of an agreement coming through seemed to grow in strength after a deferment in the trial involving Qualcomm and Nokia in Wilmington’s Delaware Chancery Court and a delay from Qualcomm in making public its quarterly financial statements.

The agreement takes into account not just the currently existing standards for high-speed mobile phones but also standards for the next generation of such phones. It also gives Nokia access to all Qualcomm patents through a license.

At the same time, it also gives San-Diego-based Qualcomm the guarantee that the cell phone giant would not use any of its own patents adversely against it. Nokia has also agreed to hand out ownership of some of its patents to Qualcomm. These include patents critical to WCDMA, GSM, and also OFDMA.

While there is no official word out on the detailed terms of the agreement between the two companies, what it effectively means is that Qualcomm can use Nokia technology on its own chipsets.

Speaking about the agreement, Nokia CFO Rick Simonson said, “This is one where saying this is important is not an overstatement. It’s a big relief for everybody.”

Nokia CEO Ollie-Pekka Kallasvuo said, “We believe that this agreement is positive for the industry, enabling the market to benefit from innovation and new technologies. The positive financial impact of this agreement is within Nokia's original expectations and fully reflects our leading intellectual property and market positions.”

Qualcomm CEO Paul Jacobs also sounded pleased with the development as he said, “I'm very pleased that we have come to this important agreement.”

Jacobs added, “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.”

With this agreement, a lot of problems would possibly be solved between Nokia and Qualcomm. Both have filed lawsuits against each other and also registered complaints with regulators in different parts of the world – Europe, North America, and Asia.

That the agreement was a welcome event was mirrored in the stock market, with Qualcomm stock shooting up by 18% within hours of the announcement.

Link: http://www.themoneytimes.com/articles/2008...id-1030323.html

Edited July 25, 2008 by KumaarShah

[retro182 1]

What does this eventually mean???

Will nokia increase its cdma offering everywhere where CDMA technology exists?????