Word broke last week that Qualcomm Inc. and L.M. Ericsson are negotiating a settlement over
CDMA Interim Standard 95 patents at issue in a Texas court. The leak came during a key pre-trial hearing over the
matter and continued rumblings of U.S. trade action against Europe over third-generation technology.
Sources close
to the companies confirmed a published report that indicated the two are negotiating a settlement that would give the
companies access to each other’s technologies and potentially settle the dispute over intellectual property rights to third-
generation technology.
“One would think that if Ericsson is going to get rights to CDMA, then Qualcomm
would get rights to W-CDMA and GSM technology,” said one executive close to the matter.
Analysts say
Ericsson, the only major vendor that has not licensed cdmaOne technology, is losing handset market share because it
does not play in the cdmaOne technology arena. Qualcomm is interested in selling its cdmaOne/Global System for
Mobile communications hybrid network around the world. The product is designed to relieve capacity constraints in
GSM systems and help operators migrate to 3G systems. Qualcomm so far has not been successful in selling the
product.
The two companies have long been adversaries, so much so that Qualcomm has a counter lawsuit looming
against Ericsson seeking damages for disparaging comments it claims Ericsson has made against cdmaOne technology.
Ericsson initially claimed the technology wasn’t commercially ready. Now its stated position is that wideband Code
Division Multiple Access technology holds better promise for delivering the next generation of digital wireless
multimedia services.
Qualcomm declined to comment on a potential settlement. But sources indicate a settlement
may include giving Ericsson significantly reduced royalty fees to cdmaOne technology. Ericsson has complained that
Qualcomm’s royalty fees are too high.
“We have always said we never wanted to go to court with this,”
said Kathy Egan, vice president of communications with Ericsson Inc. in New York. “However, we are still
hopeful that we have a strong case and are confident going forward.”
News of a possible settlement came at
the same time Qualcomm and Ericsson appeared before a Texas judge in a key week-long pre-trial hearing called a
Markman hearing. Results of the hearing were not available by RCR press time. The judge is expected to release a
ruling that will identify the scope and meaning of the eight patents Ericsson claims to own to IS-95 technology. Such a
ruling could determine which party has a stronger case going into trial. A trial between the two companies is set for
April.
Wireless executives say the patents, which mostly cover soft-handoff techniques to cdmaOne technology, are
a key element to any CDMA system, including 3G networks using W-CDMA and cdma2000. But resolution on IS-95
patents likely would extend to other patents associated with 3G technology, sources say.
Qualcomm and Ericsson
today remain deadlocked over 3G patents. Both claim to hold patents to W-CDMA and cdma2000 technologies.
Qualcomm wants one CDMA-based standard while Ericsson wants multiple standards and reciprocal licensing. The
International Telecommunication Union is trying to move ahead despite the IPR deadlock to decide on a family of
standards by March 31.
With apparent progress toward a resolution over 3G patents, the trade issue remains a
wildcard in the 3G debate. U.S. and European wireless executives-including representatives from Qualcomm and
Ericsson-at this month’s TransAtlantic Business Dialogue forum agreed the United States should not initiate a Super
301 trade action against Europe over 3G technology.
“I know that our statements are taken very seriously
[within the U.S. government],” said John Wilson, vice president of technology policy with the Information
Technology Industry Council, which sponsored the TABD forum.
Super 301, a multi-step process that calls for
bilateral negotiations on trade disputes but can lead to retaliatory action, was used previously by the United States to
leverage Japan into relaxing barriers to its telecommunications, satellite and super computer sectors.
The United
States remains concerned that Europe has chosen one 3G standard, W-CDMA technology, which it believes shuts out
U.S. technology from Europe.
But Senate minority leader Tom Daschle (D-S.D.) late last week in a letter urged
U.S. Trade Representative Charlene Barshefsky to “place a high priority on the [European Union’s] exclusion of
American digital wireless technology in evaluating the most significant unfair trade practices facing U.S. exports. To
that end, I urge you to consider the full range of negotiating tools in order to send the necessary message to the EU that
the United States will not tolerate any protectionist effort to shut out American digital wireless technology from
competition in European markets.”
Rep. Sander Levin (D-Mich.), ranking Democrat on the House Ways and
Means Trade Subcommittee, also urged Barshefsky last week to include the 3G issue in the National Trade Estimate
Report and as a Super 301 priority.
“It is imperative that the United States insist that any effort to shut out
American digital wireless technology from competition in European markets will not be tolerated,” he wrote in a
letter to Barshefsky. “Now that the administration has renewed Super 301, there is a strong case for including the
European Union’s exclusion of American digital wireless telecommunications equipment and services on any list of
priority barriers to free and fair trade.”
The USTR is expected to move swiftly to provide Congress with a
report on global trade barriers by March 31-the same day the ITU is to announce 3G standards. At the end of April, the
trade-barrier list will be narrowed down, and the United States will begin trade negotiations to resolve disputes.
U.S.
State Department and EU officials are set to meet later this week in Washington for the Dialogue on the Information
Society. 3G technology is on the agenda.
U.S. and European wireless executives at this month’s TABD meeting
agreed to pursue a framework for an umbrella CDMA standard that combines common elements of competing CDMA
technologies and gives operators the ability to choose from three different CDMA modes. The GSM Alliance and the
Universal Wireless Communications Consortium heralded the move because it preserved their views that carriers
should be allowed to choose from a menu of technologies. The CDMA Development Group said it was encouraged by
the move and the next step will be to converge cdma2000 and W-CDMA technologies.
The agreement does not
resolve hotly contested differences over chip rate and pilot and synchronization schemes.
“The agreement is
the same plate of agreements we reached in Beijing,” said Keith Paglusch, senior vice president of operations
with Sprint PCS, the country’s largest CDMA operator. “We’re still where we were many months
ago.”
Paglusch said carriers will meet March 8 in San Francisco to discuss harmonization of the two CDMA
proposals. Another meeting is scheduled for late March. Fourteen operators from Asia, the United States and Europe
met last month in Beijing, China, to discuss convergence.
Carriers remain split over the chip rate. W-CDMA
technology, based on GSM technology, uses a higher chip rate than cdma2000 technology, an evolution of today’s
cdmaOne systems. W-CDMA backers are unwilling to move the chip rate bel
ow 3.84 Megachips per second, while
cdmaOne operators say the chip rate cannot move above 3.68 Mcps and stay backward compatible with today’s
cdmaOne systems. Many Eruopean operators at the Beijing meeting proposed to co
mpromise by offering a multiple
chip rate that allows the use of both rates through multimode handsets. Many cdmaOne operators remain strongly
opposed to this solution, saying it adds unnecessary costs to handsets.
