I imagine cross licensing is very involved..On one hand Qualcomm is seeking to stop TI from selling CDMA chips..and today TI throws gasoline on the fire by announcing they are selling a WCDMA chip utilizing the same Qualcomm patent portfolio used in their original cross licensing agreement..apparently we are not privy to all the nitty gritty. details..
OLD NEWS
TI Bites Back Qualcomm
By Motley Fool Staff
September 24, 2003
Texas Instruments (NYSE: TXN) struck back in a lawsuit brought by Qualcomm (Nasdaq: QCOM) yesterday. At stake are megabucks in wireless chip revenue. But in a time when litigation is the last legal form of gladiatorial combat, investors shouldn't expect that only one gladiator will prevail.
Qualcomm sued Texas Instruments in July seeking to invalidate a cross-license agreement that allowed the latter to produce wireless communications chips using Qualcomm patented CDMA technology. Texas Instruments yesterday countersued, complaining in a prepared statement about reports that Qualcomm grants discounts to wireless handset manufacturers that agree to make Qualcomm their sole CDMA supplier. Texas Instruments markets CDMA chips in partnership with Nokia (NYSE: NOK) and STMicroelectronics (NYSE: STM).
In a cross-licensing agreement, both parties open patent portfolios to each other usually on a royalty-free basis. Qualcomm apparently needs TI's know-how less than TI needs the Mighty Q's, so Qualcomm wants to end that deal either behind the scenes by strong-arming customers or through the courts so it can negotiate a more favorable new license deal or cut out TI altogether.
More CDMA competition presses prices downward for all, which, along with analyst reports of a CDMA chip inventory buildup, takes some of the oomph away from Qualcomm's Sept. 15 announcement that healthy sales would boost this quarter's earnings to the high end of prior forecasts.
In an age when coliseums are empty but courtrooms are full, this is how companies posture and fight and eventually do a deal when the stakes are high. Expect no resolution to this suit -- nor any serious effects for either company -- anytime soon. These lawsuits are routine in the wireless biz because companies with strong monetary interests in competing technology standards fight over patent turf. Rarely do they determine the health of established businesses that must find ways to accommodate each other.
Cautious investors seeking long-term holdings in the industry might well include both Qualcomm and the real power at issue, Nokia, to avoid picking sides in a war -- standards, legal, or otherwise.
But whether Solomon or partisan, be sure to step over to our Qualcomm and Nokia discussion boards for information, analysis, and healthy debate.
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