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Mobile-makers say 3G patent licensing breaks antitrust laws

Nokie, Ericsson and four other mobile phone firms on Friday asked the European Commission to investigate alleged anti-competitive behaviour by Qualcomm Inc. in the licensing of essential patents for 3G mobile technology.31 Oct 2005

The six separate complaints accuse the wireless communications firm of breaching European competition rules and reneging on commitments it made during negotiations leading to the adoption of the wideband code-division multiple access (WCDMA) 3G standard.

This standard was instrumental in the development of 3G, and enables phones to include demanding applications such as video and internet access. Qualcomm owns key patents in the technology and its agreement to license use of its innovations on fair, reasonable and non-discriminatory terms was necessary before the standard could be adopted.

According to Broadcom, Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments, Qualcomm is not fulfilling its commitments.

The phone companies accuse Qualcomm of trying to exclude rival mobile phone chipset makers from the market and is preventing others from entering. In particular they allege that Qualcomm is refusing to license essential patents to potential chipset competitors on fair, reasonable and non-discriminatory terms, and is offering lower royalty rates to handset customers who buy chipsets exclusively from Qualcomm.

The mobile phone firms also accuse Qualcomm of charging excessive and disproportionate royalties for its WCDMA essential patents, in particular by imposing the same royalty rate on WCDMA 3G handsets as it does for CDMA2000 3G handsets (which are based on the CDMA 2000 standard). This is despite the fact that Qualcomm has contributed far less technology to the WCDMA 3G standard than it has to the CDMA2000 standard, say the firms.

“Standards are established to guide the industry’s technology development and provide a healthy environment for innovation and competition,” said Joe Hubach, General Counsel, Texas Instruments Incorporated. “We believe Qualcomm has abused its licensing position in certain standards and has inhibited legitimate competition. If this conduct goes unchecked, the risk is that consumers in Europe and around the world will pay higher prices for mobile phones and services and have less access to innovative products.”

In response, Qualcomm issued a statement describing the allegations as factually inaccurate and "legally meritless," and pointing out that five out of the six complaining firms had already agreed licence terms with it.

“This action appears to be nothing more than an attempt by these licensees to renegotiate their licence agreements by seeking governmental intervention,” said the firm.

According to Dr Paul E. Jacobs, Qualcomm’s CEO, “It is not surprising that the reported allegations come largely from entrenched 2G suppliers who have the most to lose from the enhanced and expanded competition in 3G created by Qualcomm’s widespread licensing and supply of enabling 3G technology, chipsets and software.”

The firm said it will defend the claims vigorously.