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August 13, 2009

Qualcomm disputes anti-trust claims by JFTC

Denies forcing customers to license patents on a royalty-free basis

By CBR Staff Writer

Qualcomm said that it disputes claims by Japan’s anti trust regulator that it has forced Japanese licensees to cross license patents to it on a royalty-free basis and forced them to accept a provision under which licensees agreed not to assert their essential patents against each other.

In a draft order, the Japan Fair Trade Commission (JFTC) reportedly seeks Qualcomm to modify existing licenses with Japanese companies to eliminate these provisions while preserving the license of Qualcomm’s patents to the Japanese companies.

If Qualcomm were to eliminate these provisions as contemplated by the draft order, there is a risk that some Japanese licensees may attempt to assert their previously licensed patents against Qualcomm, its customers and licensees, the company said.

Qualcomm said in a statement: “Qualcomm naturally disputes the notion that any provisions in our license agreements with Japanese companies were forced upon them. These licenses were agreed to voluntarily by the Japanese licensees many years ago, after extensive arms-length negotiations. Indeed, the non-assert provision was rejected by several Japanese companies, and is not even a provision in those agreements.”

The company said that it will submit a written response opposing the draft order within the next two weeks. If the investigative staff adopts the draft order in whole or in part, Qualcomm will request a full evidentiary hearing and review by the JFTC.

Last month, the Korean Fair Trade Commission has issued a $200m fine against Qualcomm, after ruling that certain discounts the chip maker offers to the Korean customers on the purchase of its CDMA chipsets are in violation of Korean competition law. Qualcomm disagrees with the ruling.

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