Warns investors of possible risk
Qualcomm and Nokia may not renew mutual licensing agreements after April 2007, stopping both companies from selling technology incorporating each others’ intellectual property. A Q-10 statement from Qualcomm to the SEC reveals under its “Risk” heading that the current licensing deals, whereby Nokia licences Qualcomm IPR for CDMA technology, and Qualcomm licenses Nokia’s integrated circuit technology, may no be renewed. The companies are currently in dispute, with Nokia filing a complaint in Autumn 2005 to the EU that Qualcomm’s licensing regime was unfair, and Qualcomm accusing Nokia of breaching its IPRs on equipment it sells in the USA.
Qualcomm’s statement to the SEC contained the following section:
“We have a license agreement with Nokia Corp. which in part expires on April 9, 2007. While the parties have been in discussions to conclude an extension or a new license agreement beyond that time period, there is no certainty as to when we will be able to conclude an agreement or the terms of any such agreement. There is also a possibility that the parties will not be able to conclude a new or extended agreement by April, 2007.
“In that event after April 9, 2007, unless and until the existing agreement is extended or a new agreement is concluded, Nokia’s right to sell subscriber products under most of our patents (including many that we have declared as essential to the CDMA, WCDMA and other standards) and therefore Nokia’s obligation to pay royalties to us will both cease under the terms of the current agreement, and our rights to sell integrated circuits under Nokia’s patents will likewise cease under the terms of the current agreement.”
Qualcomm went on to hint that any breach of its IPR in the event of the agreement stalling would have severe consequences.
The statement asks readers to “note that any company that makes or sells products without a license under the applicable patents of another company would be exposed to patent infringement litigation by such other company. The patent holder, whether we or another company, would generally be entitled to seek all available legal remedies including damages for past unlicensed sales in the form of lost profits or a reasonable royalty, and damages can be trebled for willful infringement.”
Nokia said it could not comment on Qualcomm’s notice as the terms of its license deals were covered by a non-disclosure notice.
Qualcomm’s declaration of the risk of part of the agreement not being renewed is clearly part of its ongoing disgagreements with Nokia and other vendors. Cancelling part of the deal would obviously inconvenience Nokia, but would also significantly impact Qualcomm’s licensing revenues. But that the company feels it has to identify the risk is evidence either of deteriorating relations between the companies, or is intended to send a message to Nokia that Qualcomm intends to play hardball on this issue.