Qualcomm and Motorola Settle Long-term Differences
By: Janine Sullivan, Contributing Writer
Last month, Qualcomm (San Diego) and <%=company%> (Schaumburg, IL) announced that they had agreed to extend their licensing agreements and dismiss their outstanding patent infringement lawsuits (see Qualcomm and Motorola Extend License Agreement, Settle CDMA Patent Litigation) in regard to Code Division Multiple Access (CDMA) technology for wireless communications systems.
Why settle?
The lawsuits began back in March of 1997 after Qualcomm introduced its "Q Phone" at the CTIA show. After the phone was launched, Motorola apparently alleged that the Q phone infringed some of its design and utility patents as well as trade dress and common law rights relating to the appearance of certain Motorola wireless telephone products. In response, Qualcomm filed a declaratory judgment action against Motorola, which began a veritable avalanche of claims and counterclaims that were eventually consolidated. Then, in 1999, Qualcomm introduced further litigation; Motorola quickly counterclaimed.
The recent agreement settles all of this pending litigation, which both companies seem to think, will be good for business in general and CDMA technology in particular. The two companies have been involved in private settlement discussions for years. But, they recently came to the table as a result of an order from the Federal District Court in San Diego. Magistrate Judge Brooks led the discussions that resulted.
Scott Wyman, director of corporate Media Relations, Motorola, explains his perspective on the settlement. "As in any highly complex civil matter, a very large number of factors contributed to the settlement. Most importantly, the senior executive leadership of both companies determined that continuing the litigation was not in the best interest of the companies. The companies have resolved to improve the relationship between them in the future and determined that doing so in the face of continuing litigation was not possible."
Christine Trimble, Senior Manager, Public Relations, Qualcomm, explains her company's position on the accord. "Settlement discussions had been ongoing since 1997 at varying levels of intensity. There was an opportunity to put the dispute behind us through a settlement agreement that is advantageous to both parties."
The settlement agreement will allow both companies to market CDMA chipsets without paying royalties to the other based on chip sales. In addition, Motorola agreed to pay royalties to Qualcomm for using newly licensed patents for CDMA subscriber products.
According to Wyman, no payments were made in order to settle the litigation. However, "small payments will be made by both parties to resolve certain other issues that were not subjects of the litigation."
Impact on CDMA industry
Now that these two major CDMA players are no longer burdened with litigation, what impact will it have on the CDMA industry?
"The settlement agreement removes a major obstacle between the two companies, and now gives us the opportunity to explore opportunities. As Motorola was one of Qualcomm's first licensees and an early supporter of CDMA, we will be looking for opportunities to continue to expand the CDMA market and deliver more valuable services for subscribers," reports Trimble. "It is our hope, and we believe Motorola's, that given the strengths of each company, we will find a number of ways to work together to help continue to grow and participate in this exciting market."
Wyman downplays the importance of the agreement to the industry, saying, "We believe that the industry at large has viewed the litigation as a private matter to be resolved by the parties. The resolution in 1999 of the litigation between Ericsson and Qualcomm, which is viewed by many as resolving the major impediment to world-wide adoption of CDMA technology, was probably more significant for the industry as a whole."
His perspective on the two companies working together is similar to Trimble's, and both companies sound anxious to move forward. "Motorola expects that resolution of this litigation with Qualcomm will permit the companies to focus their attentions on finding ways to cooperate to better serve the needs of our customers."
Wyman believes that the companies have what they need to move forward, saying "Both Motorola and Qualcomm received the licenses and rights necessary from the other to pursue its stated business plans. Both hope to use this settlement as the springboard to a broadened and strengthened business relationship." (Motorola is an important ASIC customer for Qualcomm.)
Effects on 3G?
It's difficult to look at the impact of any event in the wireless industry without projecting its potential effects on third-generation (3G) wireless development. Even though the agreement between Motorola and Qualcomm allows some movement forward on 3G development, it seems that there may be more for the two powerhouses to iron out.
Wyman explains that the announced agreement pertains to CDMA standards that use 1.25-MHz spreading techniques, and it includes handset and chipset rights. "As the terms are commonly used, this will cover both 2G and 2.5G, but not 3G, because 3G CDMA standards use larger spreading bandwidths."
Even though not all of the issues between Motorola and Qualcomm surrounding 3G have been resolved, Wyman observes that the companies decided "to solve those problems requiring a more immediate solution so that other issues could be discussed in a more positive atmosphere." The companies will continue those further discussions in confidence. "We expect to work diligently with Qualcomm over the coming months to resolve remaining issues," reports Wyman.
Trimble explains that there is a small amount of room for 3G development in the recent accord. Apparently, the agreement allows Motorola access to patents filed before July 3, 1995, including 3G CDMA modes. However, Motorola will still require a license for patents covering 3G filed by Qualcomm after July 3, 1995.
Hopefully, the current mood of cooperation will prevail, and the companies will reach agreement on these 3G licenses quickly. In the meantime, look for both to begin launching new CDMA products over the ensuing months.
About the author
Janine Sullivan is a contributing writer for RF Globalnet. She is also the former editor of Communications Products magazine and the founder and owner of The Write Solution, a technical writing agency. Janine can be reached at The Write Solution, write@interactive.net.