BRUSSELS, Belgium-Wireless heavyweights L.M. Ericsson, NEC Corp., Nokia Corp., Texas Instruments Inc. and Panasonic Mobile Communications joined chipmaker Broadcom Corp. in filing formal complaints against Qualcomm Inc.’s licensing tactics. The move stands as the first coordinated attack on Qualcomm over antitrust issues, and could ultimately change the 3G playing field.
The six companies filed complaints with the European Commission, alleging Qualcomm has engaged in anti-competitive business tactics in the W-CDMA market. The companies claim Qualcomm promised to license its 3G patents fairly-which was why industry initially embraced the W-CDMA standard-but has so far not done so.
“Intellectual property rights have an increasing role in business,” said Ilkka Rahnasto, vice president of intellectual property rights with Nokia. “There are rules of law that apply to the licensing business, and patentees and other intellectual property rights owners cannot ignore them.”
Qualcomm did not immediately return requests for comment.
The filings follow a complaint Broadcom filed in July with the New Jersey U.S. district court, which alleges Qualcomm’s business strategies violate U.S. antitrust laws. The monopoly allegation puts Qualcomm in such renowned company as Microsoft Corp. and AT&T Corp.
“Our goal is simply to ensure fair competition and a level playing field, not just for Broadcom, but for the entire cellular industry,” said Scott McGregor, Broadcom’s president and chief executive officer, in announcing the company’s filing in July. “Qualcomm’s practices prevent that. Their monopoly in CDMA technology has increased the price of cell phones in the U.S., and we are hoping that the courts will prevent the same thing from happening with the next-generation 3G cell phones. Qualcomm’s monopolistic activities limit competition, stifle innovation, and ultimately harm consumers and service providers.”
Broadcom’s antitrust filing includes a variety of detailed, incendiary allegations against Qualcomm. Specifically, the lawsuit deals with Qualcomm’s licensing arrangements for CDMA and W-CDMA technology-a hidden area of the industry that executives uniformly refuse to discuss and outsiders can only guess at.
This week’s filings with the EU are not open to the public.
Dozens of companies claim they own essential W-CDMA patents, and each wants to get its share of the market’s licensing revenues. Qualcomm, Nokia and Ericsson have perhaps the strongest W-CDMA patent positions-although even that isn’t clear because there is no independent authority to validate W-CDMA patents. Thus, startups must negotiate licensing arrangements with each patent holder and on their own decide if those patents are essential.
Many believe Qualcomm insists on keeping its rates at around 5 percent for W-CDMA-the same as its rates for CDMA. Qualcomm has previously declined to discuss its licensing rates. The 5 percent rate enrages Qualcomm critics, who argue the company’s patent position in W-CDMA is not as strong as in CDMA, and its rates should reflect that.
If EU regulators agree to take on the antitrust case, they can potentially force Qualcomm to change its licensing tactics.
