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ABI: It's quality vs. quantity for Qualcomm, Nokia

Posted: 28 Mar 2007 ?? ?Print Version ?Bookmark and Share

Keywords:W-CDMA? GSM? royalty fees?

The Qualcomm and Nokia royalty spat further intensified with a court filing from Nokia claiming that some of its licenses from Qualcomm in Europe are fully paid up.

According to analysts at ABI Research, there will be no resolution to this situation without outside influence because the two companies are negotiating from fundamentally opposite positionsQualcomm values quality while Nokia points to quantity. Qualcomm sees the worth of its core W-CDMA IP as far more valuable than the number of patents it holds, while Nokia contends that its volume of patent activity in recent years should be recognized by lower royalty fees.

ABI wireless research director Stuart Carlaw notes that, "This situation is reminiscent of the immovable object versus the unstoppable force: there has been too much posturing for either party to back down now. It will be one of two things that will break this deadlock: a court ruling, or ongoing damage to stock prices." Carlaw added that, "Even if Nokia wins this battle, the average cumulative royalty rate for W-CDMA multi-mode terminals will not be decreased a great deal, due to the need to support GSM and its royalty structure. At best there will be a 1 percent difference by 2011, with a cumulative rate likely to be around 7.4 percent."

A recent research report from ABI Research found that Qualcomm holds a collection of the most frequently cited patents for the W-CDMA standard. This is generally accepted as the best measure of patent portfolio quality. Correspondingly, Nokia has sunk billions of dollars into improving its patent position regarding W-CDMA, and it is a given that they now own more patents relating to the technology than when the original license agreements were negotiated.

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