Qualcomm Incorporated (Nasdaq: QCOM) has now had an opportunity to review a full translation of the previously disclosed draft order from the Japan Fair Trade Commission (JFTC). The Company has also obtained additional information about the allegations from the JFTC and reviewed some of the materials the JFTC says it is relying upon, including statements by several Japanese licensees.
The draft order asserts that Qualcomm's Japanese licensees were forced to cross license patents to Qualcomm on a royalty-free basis and were forced to accept a provision under which licensees agreed not to assert their essential patents against each other. The draft order seeks to require 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 its licensees.
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. In addition, these cross-license and non-assert provisions, common elements of many license agreements, provide enormous benefits to our customers and licensees. Qualcomm believes that requiring revisions of long-standing contracts is neither justified by the facts nor supported by the law.
The Company will submit a written response opposing the draft order within the next two weeks. The JFTC investigative staff will then decide whether to issue a formal order reflecting the terms of the draft order, modify it in some respect, or decline to issue a formal order. 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. Qualcomm will also seek to have any order suspended or stayed during the pendency of the reviews and appeals.
Regarding Forward Looking Statements
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 defend against the claims set forth by the JFTC, 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, 2008, and most recent Form 10-Q.
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 2009 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.