Qualcomm Incorporated (Nasdaq: QCOM) today confirmed that the Japan Fair Trade Commission (JFTC) has issued an order relating to its license agreements with Japanese manufacturers. The order is unchanged from the draft order that was issued by the JFTC on July 24, 2009. It alleges that Qualcomm forced Japanese licensees to accept cross-license provisions without compensation, and to accept a provision under which the Japanese licensees agreed not to assert their essential patents against other licensees that had agreed to a similar provision. The order directs Qualcomm to eliminate these provisions from its license agreements with its Japanese licensees.
“Contrary to the allegations in the JFTC order, none of our Japanese licensees were forced to enter into license agreements with us. The provisions at issue were the subject of extensive arms-length negotiations with sophisticated parties, are common in technology licensing agreements, and generate enormous benefits for the wireless industry and consumers. These provisions promote 'patent peace,' and reduce transaction costs and licensing fees. In addition to Qualcomm, many other industry members throughout the world, including handset and infrastructure manufacturers as well as wireless operators, have relied on these provisions in business planning,” said Donald J. Rosenberg, executive vice president and general counsel of Qualcomm. “If Qualcomm were to eliminate these provisions, there is a risk that some Japanese licensees may attempt to assert their previously licensed patents against Qualcomm, its customers and its licensees.”
Qualcomm will exercise its right under Japanese law to have a full evidentiary hearing. If the JFTC affirms the order following administrative review, Qualcomm will pursue an appeal before the Japanese courts. In the interim, Qualcomm will seek to have the order suspended or stayed during the pendency of administrative and judicial review.
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.