SAN DIEGO - October 20, 1998 - Qualcomm Incorporated (NASDAQ: QCOM) today announced that Ericsson, Inc. and its Swedish parent Telefonaktiebolaget LM Ericsson have dismissed with prejudice all claims under three of the patents asserted against Qualcomm in the litigation brought by Ericsson in Marshall, Texas. In a further development, Ericsson, in papers filed with the United States Patent and Trademark Office, also admitted the invalidity of the claims of two other patents asserted against Qualcomm in the lawsuit, and surrendered those patents. All five patents are among the eight patents that, beginning in December 1995, Ericsson repeatedly told the telecommunications industry were "blocking" patents or were "essential" to make or use cellular products compliant with IS-95 and other cdmaOne standards.
In December 1995, Ericsson represented to the Telecommunications Industry Association and others that it held eight allegedly essential patents for IS-95. Qualcomm challenged Ericsson's representation, and Ericsson filed a patent infringement lawsuit against Qualcomm in Marshall, Texas in September 1996, eventually bringing a total of 11 patents into the case. Qualcomm counterclaimed against Ericsson for unfair competition, stating in court filings that "Ericsson has knowingly made false and unfounded claims, including the assertion that it owns or controls patents that are 'essential' to the manufacture, use or sale of products that implement the IS-95 standard" with the "inten[t] that its false claims ... would have an anticompetitive effect and injure Qualcomm's business." Ericsson's dismissal or surrender of the majority of the supposedly essential patents substantiates Qualcomm's charge that Ericsson deliberately misled the industry.
"The IS-95 standard has not changed and Ericsson's patents have not changed since Ericsson first publicly contended that these five patents were essential to IS-95. In light of those facts, Ericsson's recent actions and admissions can only confirm Qualcomm's complaint that Ericsson wrongfully and falsely claimed essential patents," said Louis Lupin, Qualcomm's senior vice president and proprietary rights counsel. "That Ericsson waited more than two years to dismiss these meritless claims sheds light on its motives. These events show that Ericsson's statements to the industry with respect to its CDMA patent position are not believable."
Unlike Qualcomm, whose CDMA patent position has been accepted by more than 55 major telecommunications companies that have entered into royalty-bearing licenses with Qualcomm, Ericsson has yet to announce a single royalty-bearing license under any of Ericsson's alleged CDMA patents for any CDMA standard. Moreover, Ericsson has not identified any essential patents it claims to hold with respect to any proposed third generation CDMA standard, including the W-CDMA proposal it has promoted in Europe, Japan and elsewhere, despite specific requests to do so from standards-setting bodies. Consequently, it is not surprising that notwithstanding Ericsson's threatened and actual litigation against CDMA equipment manufacturers, Ericsson's claims to hold essential CDMA patents have not been accepted.
Ericsson had been contending in the Texas lawsuit that the three dismissed patents, U.S. Pat. Nos. 5,148,485, 5,239,557, and 5,430,760, covered certain features of IS-95 compatible products sold by Qualcomm, and that the two surrendered patents, U.S. Pat. Nos. 5,109,528 and 5,327,577, covered "soft handoff" in accordance with IS-95. Ericsson dropped the three patents from the lawsuit shortly before Ericsson was due to disclose in court proceedings its interpretation of the meaning and scope of the allegedly infringed claims and several months before the scheduled trial date in February 1999. Ericsson's surrender of the other two patents and admissions of invalidity were made during reissue proceedings before the United States Patent Office in which Ericsson is applying for new claims which it argues avoid the invalidity problems of the surrendered claims. To date, Ericsson has not dismissed its claims against Qualcomm under the surrendered patents in the Texas litigation.
Headquartered in San Diego, Calif., Qualcomm develops, manufactures, markets, licenses and operates advanced communications systems and products based on its proprietary digital wireless technologies. The Company's primary product areas are the OmniTRACS® system (a geostationary satellite-based, mobile communications system providing two-way data and position reporting services), CDMA wireless communications systems and products and, in conjunction with others, the development of the Globalstar™ low-earth-orbit (LEO) satellite communications system. Other Company products include the Eudora Pro® electronic mail software, ASIC products, and communications equipment and systems for government and commercial customers worldwide. For more information on Qualcomm products and technologies, please visit the Company's web site athttp://www.qualcomm.com/.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including timely product development, the Company's ability to successfully manufacture significant quantities of CDMA or other equipment on a timely and profitable basis and those related to performance guarantees, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 28, 1997 and most recent Form 10-Q.
# # #
Qualcomm, OmniTRACS and Eudora are registered trademarks of Qualcomm Incorporated. The Q logo, Q phone, PdQ, QCell, CabCARD and TruckMAIL aretrademarks of Qualcomm Incorporated. Globalstar is a trademark of Loral Qualcomm Satellite Services, Incorporated. cdmaOne is a trademark of theCDMA Development Group. PalmPilot is a trademark of Palm Computing, Inc., 3Com Corporation, or its subsidiaries.