QUALCOMM in Euroland
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By oroughy
May 14, 2007

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There was an IP conference at University College, London, yesterday that turned into a forum on whether Qualcomm's licensing conduct violates European competition laws. Here's a quick recap:

Competition lawyers on opposite sides of the Qualcomm debate faced off over the licensing of IPRs and standard-setting.

Marcus Glader, of Cleary Gottlieb Steen & Hamilton, emphasized how important it is to license patented technology on fair, reasonable and non-discriminatory, or "FRAND," terms. "This promotes economic efficiency and confers significant benefits to consumers," he said.

[Editorial note: Hogwash. "Fair" and "reasonable" are such subjective terms that no one can legitimately claim to know what they mean. Therefore, they have no value. A good argument could be made that the same criticism applies to the term "non-discriminatory."]

Glader warned that standard-setting locks competitors out, citing a recent report from the US Department of Justice and Federal Trade Commission on antitrust enforcement and IPRs. He also said that essential patent-holders must not exploit the extra power they gain as a result of being included in the standard. Glader claimed that by agreeing to FRAND licensing terms, patent holders voluntarily forego certain rights, and are obliged to license their technology to anyone.

[Those comments are also suspect. "Non-discriminatory" doesn't automatically connote "all-inclusive." For example, I doubt that Glader would have a beef with a restaurant that refused to serve anyone not wearing a shirt, as long as they really enforce that rule against everyone, i.e., not just against club-footed Eskimos or some such group.]

It won't surprise you to hear that Glader is counsel to Nokia, one of the 6 companies that accuse Qualcomm of blocking rival chipmakers from competing effectively by not licensing key patents on "fair" cost terms.
Trevor Soames, of Howrey LLP [my old firm!], counsel to Qualcomm, gave a rebuttal, disputing Glader's interpretation of "fair and reasonable." Soames argued that standardization doesn't automatically confer market power. He added that while Nokia can earn revenue from handsets and other products, "pure innovators" like Q are entirely dependent on royalties.

[I have to confess I don't really see where he was trying to go with that argument.]

Soames also disputed the notion that agreeing to license on FRAND terms constitutes a waiver of the right to enforce one's IPRs. "How can there be a waiver of injunctive relief without explicit consent?" he said, noting that litigation would be likely to delay royalty payments further, to the benefit of infringers and to the detriment of patent holders.

[Well, yeah, sort of. If the patent holders eventually win, they sometimes get more damages and/or interest payments in compensation for the litigation periods.]

Soames's comments led to a brisk audience discussion. One delegate asked him a loaded question: "How would a FRAND agreement work in a case where one party was delusional about the importance of its technological innovation? Soames's reply: "I don't think anyone's delusional in this case. Without Qualcomm's technology, you wouldn't have your 3G phone."

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