Qualcomm Incorporated (Nasdaq: QCOM) today stated that, although it has not seen the actual complaint, the reported allegations made to the European Commission are factually inaccurate and legally meritless. The accusation that Qualcomm has not lived up to its commitments to standard-setting organizations to license its essential patents on fair and reasonable terms is belied by the more than 130 licenses that Qualcomm has granted to a broad range of companies, among them five of the six reported claimants (for a complete list of Qualcomm’s licensees, visit www.qualcomm.com/technology/licensing/subscriber.htm). These licenses, including agreements with the world's largest and most sophisticated manufacturers of wireless telecommunications equipment, make Qualcomm's patents the most extensively licensed portfolio in the cellular industry. The widespread market acceptance of Qualcomm’s licensing program conclusively demonstrates that Qualcomm’s licensing practices are fair, reasonable and pro-competitive.
Qualcomm disagrees with any suggestion that it has contributed less significant technology to the WCDMA 3G standard. Indeed, it is widely acknowledged that efforts to design around Qualcomm’s fundamental innovations in formulating the UMTS/WCDMA standard were unsuccessful. It is especially ironic that the complaints are being lodged by suppliers who voluntarily entered into license agreements with Qualcomm, acknowledging its leading WCDMA patent portfolio. This action appears to be nothing more than an attempt by these licensees to renegotiate their license agreements by seeking governmental intervention.
Qualcomm has granted and announced far more licenses than any other company claiming to hold patents essential to the CDMA2000, WCDMA or TD-SCDMA standards. Qualcomm's extensive licensing program has fostered the widespread adoption of leading-edge technologies and promoted vibrant competition throughout the wireless industry, encouraging innovation and technological advancement. Contrary to the reported allegation that Qualcomm is seeking to exclude chip competitors, Qualcomm has licensed major chip manufacturers, including Texas Instruments, NEC, Infineon, Philips, Agere, Motorola, VIA and Fujitsu.
“We are proud that our licensing program has enabled many new entrants to design innovative wireless devices and compete in the 3G marketplace,” said Dr. Paul E. Jacobs, chief executive officer of Qualcomm. “It is not surprising that the reported allegations come largely from entrenched 2G suppliers who have the most to lose from the enhanced and expanded competition in 3G created by Qualcomm’s widespread licensing and supply of enabling 3G technology, chipsets and software. The many new handset market entrants, working in cooperation with Qualcomm, threaten the market shares of these entrenched manufacturers and their component suppliers. We welcome the opportunity to demonstrate these facts in an open and public process.”
"It is ironic that these companies claim that Qualcomm’s behavior has harmful effects for the mobile telecommunications sector when the facts are completely contrary. In fact, the average selling price of WCDMA handsets is declining, and WCDMA subscriber uptake is increasing each at a faster rate than GSM experienced during its early commercial years,” said Steve Altman, president of Qualcomm.
Unlike GSM, where there are a small number of entrenched suppliers, the WCDMA market enjoys healthy competition among many handset suppliers, including companies from Korea, Japan, China, the United States and Europe as a result of Qualcomm’s proactive licensing of its substantial R&D investments and the widespread availability of chipsets and software from Qualcomm and its licensees.
The allegations regarding royalty discounting, while misleading, are simply complaints about legitimate and lawful price competition, which is good for manufacturers, operators and especially consumers. Qualcomm has never made the purchase of its chips a condition of granting a license.
Qualcomm will vigorously defend against any claim of unlawful conduct in its licensing or chipset sales practices.
Qualcomm Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in San Diego, Calif., Qualcomm is included in the S&P 500 Index and is a 2005 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including the Company's ability to successfully design and have manufactured significant quantities of CDMA components on a timely and profitable basis, the extent and speed to which CDMA is deployed, 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 26, 2004, and most recent Form 10-Q.