ERICSSON (Nasdaq: ERICY) and Qualcomm (Nasdaq: QCOM) today announced that they have entered into a series of definitive agreements that resolve all disputes globally between the companies relating to Code Division Multiple Access (CDMA) technology. Under the agreements, ERICSSON and Qualcomm agree to jointly support a single world CDMA standard with three optional modes for the next generation of wireless communications, to enter into cross licenses for their respective patent portfolios and to settle the existing litigation between the companies. The cross licenses are royalty bearing for CDMA subscriber units sold by either party. In addition, ERICSSON will purchase Qualcomm's terrestrial CDMA wireless infrastructure business, including its R&D resources, located in San Diego, Calif. and Boulder, Colo., and will assume select customer commitments, including a portion of vendor financing obligations, related assets and personnel. The agreements are subject to necessary regulatory approvals and other customary conditions.
The agreement settles the litigation between ERICSSON and Qualcomm and provides for cross licensing of Intellectual Property Rights (IPRs) for all CDMA technologies, including cdmaOne™, WCDMA and cdma2000™. Qualcomm also will receive rights to sublicense certain ERICSSON patents, including the patents asserted in the litigation, to Qualcomm's Application Specific Integrated Circuits (ASICs) customers.
The companies have also agreed to jointly support approval by the International Telecommunications Union (ITU) and other standards bodies, including the U.S. Telecommunications Industry Association (TIA) and the European Telecommunications Standards Institute (ETSI), of a single CDMA third generation (3G) standard that encompasses three optional modes of operation: 1) direct sequence FDD, 2) multi-carrier FDD, and 3) TDD. Each mode supports operation with both GSM MAP and ANSI-41 networks. Qualcomm and ERICSSON believe that rapid adoption of the single CDMA standard is in the best interests of the industry and allows each operator to select which mode of operation to deploy based on marketplace needs. As part of the agreement, the companies will each commit to the ITU and to other standards bodies to license their essential patents for a single CDMA standard or any of its modes to the rest of the industry on a fair and reasonable basis free from unfair discrimination. The companies will notify the ITU and other relevant standardization entities of the agreement to remove all IPR blocking currently in force.
The grants of licenses and the settlement of all litigation, as well as the commitment to standards bodies to license their essential IPRs, will become effective upon closing of the purchase of Qualcomm's terrestrial CDMA wireless infrastructure business.
"With the resolution of 3G and the cross-licensing of our patents, Qualcomm and ERICSSON have paved the way for the expansion of global CDMA-based wireless communications,'' said Dr. Irwin Mark Jacobs, chairman and chief executive officer of Qualcomm Incorporated. ''ERICSSON's purchase of our infrastructure division underscores its commitment to CDMA, and allows ERICSSON, one of the world's leading telecommunications equipment manufacturers, to expand its CDMA capabilities. Qualcomm can now focus on its core businesses, including CDMA phones and chipsets, the Globalstar and OmniTRACS systems and new opportunities in digital cinema, wireless data and Eudora products and services."
"ERICSSON, through its agreement with Qualcomm -- a pioneer in developing CDMA technologies -- now has complete 3G competence," commented Sven-Christer Nilsson, president and chief executive officer of ERICSSON. "We are ideally positioned to support any operator anywhere in the world to migrate to 3G regardless of technology heritage or technology choice."
Qualcomm's terrestrial CDMA wireless infrastructure research and development and manufacturing division comprises infrastructure for cellular, PCS and wireless local loop. The acquisition provides ERICSSON with leading CDMA research and development, including the cdmaOne and cdma2000 product lines that ERICSSON will further develop and market. ERICSSON will establish a global CDMA center in San Diego, Calif.
"With the addition of cdmaOne and cdma2000, we will be well positioned to serve current and future CDMA markets, including the fast growing CDMA handset market," said Mr. Nilsson. "By combining this competence with our industry-leading capabilities in WCDMA, we intend to play a leading role in the converged world of wireless data services."
Qualcomm will incur a one-time charge in connection with the transactions contemplated by the agreements, the details of which it anticipates will be available when the Company announces results for its second fiscal quarter ending March 31, 1999.
Qualcomm Incorporated (Nasdaq: QCOM) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. The Company's major business areas include CDMA phones; integrated CDMA chipsets and system software; technology licensing, and satellite-based systems including OmniTRACS® and portions of the Globalstar™ system. Qualcomm is headquartered in San Diego, Calif. Qualcomm's fiscal 1998 revenues exceeded U.S. $3 billion. For more information please visit the Company's web site at http://www.qualcomm.com.
ERICSSON (Nasdaq: ERICY) is the leading provider in the New Telecoms World with communications solutions that combine telecommunications and data communications technologies with freedom of mobility for the user. With more than 100,000 employees in 140 countries, ERICSSON simplifies communications for its customers -- network operators, service providers, enterprises and consumers -- the world over. For further information, please visit the company's web site at http://www.Ericsson.com.
Qualcomm was advised by Lehman Brothers as financial advisers and Cooley Godward LLP as legal advisers, and ERICSSON was advised by Merrill Lynch&Co. as financial advisers and Shearman&Sterling as legal advisers.
Except for the historical information contained herein, this release contains forward-looking statements that are subject to risks and uncertainties, including the risk that the transaction contemplated by the definitive agreements will not be consummated, 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 27, 1998, and the most recent Form 10-Q.