Ericsson, Nokia, Texas Instruments, Broadcom, NEC, and Panasonic complained back in 2005 that Qualcomm’s licensing terms and conditions were not Fair, Reasonable and Non-Discriminatory (FRAND) and breached EC competition rules.
FRAND terms are designed to ensure that any company whose IP is incorporated into a standard should not be able to exploit the extra power this gives to their patents. The six companies making the complaints claim that charging non-FRAND royalties could lead to higher handset prices, a slower development of the 3G standard, and inhibited growth of the standard.
They say that this behavior could negatively affect the standard setting process more generally as well as the adoption of the future 4G standard.
The European Commission said the start of proceedings did not imply it had conclusive proof of an infringement but only signified it would conduct an investigation of the case as a matter of priority. No deadline has been set for the inquiry.
Qualcomm president Steve Altman said it was pleased that the commission had decided to give the case priority status to move it forward swiftly to resolution. He said the complaints were without merit and were motivated by commercial considerations of the entrenched complainants who are trying to stifle the competition that Qualcomm brings to the market.
He said Qualcomm is committed to FRAND terms and that by licensing its innovations it had opened WCDMA to new players.
While the six complaining companies have all filed individual complaints, in a joint statement they said they said they share concerns about Qualcomm’s practices which they claimed threatened the supply of WCDMA chipsets.
For some time now, Qualcomm’s competitors have alleged that it has virtually thrown in its IP free to those customers who use its own chipsets, undercutting those who have to pay Qualcomm royalties on top of the cost of the chipsets.
The battle between San Diego, California-based Qualcomm and its competitors is raging in courts throughout the world and regulatory bodies. At stake are enormous sums of money. Nokia, the leading wireless handset maker, is currently withholding license revenues to Qualcomm after an agreement between the companies expired in April. It is estimated to have paid Qualcomm $500m a year in the past.
