InterDigital Inc (IDCC)

[TFWG]

NOK's November 2002 commitment, (5% royalty cap) "initiative"

Clear as mud
By: Eneerg1 in IDCC / Recommend this post (1)
Sat, 20 Aug 05 9:01 PM
Boardmark this board / InterDigital Communications Msg. 05519 of 05535
Extract reference to (5% royalty cap) "initiative" is the essence of NOK's November 2002 commitment on behalf of competing WCDMA manufacturers and operator customers historically subsidizing GSM phones to remain competitive with CDMA counterparts... and looking forward..."The discrepancy in complexity and cost between WCDMA and cdma2000 handsets (could) further erode hopes of creating profitable subscription plans" ...

Take Nokia executive Yrjo Neuvos statement that the initiative makes WCDMA "safe to invest in for operators, manufacturers and application developers."...

The question is posed: Is NOKIA acting alone or NOW representing the collusive interests of the WCDMA value chain in multiple court actions involving US non-manufacturer, Interdigital Communications?



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(undated...sometime lt in 2002)

The murky world of 3G IPR continues to baffle as WCDMA luminaries band together and the 3G Patent Platform gets the all clear.

Imagine if you had written a Christmas song; Jingle Bell Rock' say. It would be great, cashing in on your copyright, year

after year. But what if, as you started recording, the guitarist claimed rights too, and the drummer, and the sound engineer. Would the song ever make it to vinyl?

Many are asking a similar question of WCDMA. OK, 3G is marginally more complex than Jingle Bell Rock', but the principle holds true

According to research from Nokia, some 40 companies claim to have more than 700 "essential patents" for WCDMA. No body verifies who owns which patents or how they are licensed. Add up the various boasts of major players about their IPR share in WCDMA and it comes to about 130 per cent. Samsung reportedly preferred to focus on CDMA1X two years ago because of this nightmarish complexity and lack of transparency.

In May, Nokia proposed a five per cent cap on WCDMA royalties, saying it wanted to clear up the ambiguity, reduce the cost to market, and spur WCDMA growth. The industry gave a collective shrug, Qualcomm flatly accusing Nokia of a "self-serving" attempt to limit its own royalty out-payments. Ericsson told MCI that the market should decide the price of patents.

By November, some players had changed their minds. NTT DoCoMo, Ericsson and Siemens joined Nokia in a "mutual understanding" to support "modest single-digit royalty rates" for WCDMA. The five per cent mark was mentioned, but rather obliquely, although participants are reluctant to be precise. Qualcomm remains aloof, claiming that its IPR deals are done, and done at "low single figures." Everyone is still keeping their cards close to their chest in the strategic game for IPR advantage

But why the change of heart? Perhaps it is because, six months later, 3G is still going nowhere fast and remains prohibitively expensive. Consider a recent study by consultancy Portelligent" "The discrepancy in complexity and cost between WCDMA and cdma2000 handsets (could) further erode hopes of creating profitable subscription plans," it concluded. Portelligent estimated manufacturing cost for the Samsung SPHX4200 CDMA1X handset as $127, but $280
for the Panasonic P2101V Foma terminal. WCDMA proponents have got to get costs down somehow. IPR royalty caps may be one way to appeal to cellcos' bottom line.

WCDMA IPR holders, and equipment suppliers, are jittery about the future 3G decisions of players like China Mobile and China Unicom. Take Nokia executive Yrjo Neuvos statement that the initiative makes WCDMA "safe to invest in for operators, manufacturers and application developers." Was it unsafe before? If so, why?

Perhaps Neuvo was aware of lingering resentment at being burned by GSM heavyweights like Nokia in the past. In 1998 the International Telecoms Standards User Group complained to the EC that the GSM IPR regime was prohibitively expensive, time-consuming and favourable to the big players with broad patent portfolios. In other words, an effective barrier to market.

A repeat performance would not go down well in China (or elsewhere), where licensing costs have become a major issue, particularly for local manufacturers mandated by the government to take a greater market share. If the initiative was designed to smooth the way for WCDMA in China, however, it was not enough to prevent the Chinese authorities from delaying the launch of 3G licences in early December

The Nokia-Ericsson-Siemens-DoCoMo group may have had other considerations, too. A week after their announcement, the 3G Patent Platform Partnership (3G3P) gained antitrust clearance from the US Department of Justice (after a three year legal battle) and the European Commission-the

Japanese Fair Trade Commission cleared it in June

The body is mandated to create a licensing platfonn that will encompass decisions on whether a technology is "essential" to 3G, certification, identifying patent requirements and a global licensing programme. It identifies "over 100 companies" owning essential 3G patents compared to Nokias 40, an indication of the (deliberate?) confusion that reigns. Brian Kearsey, President of the 3G3P, warns that "without a new approach, many products and systems that might be possible will be barred or will become simply cost ineffective."

The question must be how the "the major lP holders" in the above group will work in tandem with the 3G3P, which published its platform specifications on November 22nd. The "mutual understanding", so vague when it came to details, could be seen as a means for some big players to continue to set the agenda for 3G IPR licensing, particularly when it comes to royalties, rather than surrender any initiative to another body. On this reading, little has changed from the GSM paradigm except that 3G IPR is even more complicated. Those most likely to benefit are the large players with deep pockets and an army of lawyers.

j ames. tulloch@)informa. corn

8 Mobile Communications International

www.3gpatents.com/news/ClearAsMud.rtf

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The thrust of NOK's deep pockets battle against Interdigital extracted from below....

"IP is also expensive - a single global patent can cost €150,000, and this figure is dwarfed by the cost of enforcing a patent in court."


W-CDMA licensees join forces

February 2003

As 3G operators roll out W-CDMA technology across Europe, licensing issues continue to shape its development. Ben Williams argues that co-operation between intellectual-property owners is vital for the wireless industry's future.

Reaching agreement

W-CDMA, the technology behind the UMTS standard in Europe and FOMA in Asia, was developed by the 3G Partnership Project as a high-speed, high-capacity radio interface for 3G wireless networks. This standardization of W-CDMA has allowed the thousands of companies that make up the wireless telecoms sector to co-ordinate their thrust towards better technology. Consequently, intellectual property (IP) - patents, trademarks, copyright and design rights - associated with W-CDMA has become very valuable, leading to a patents "gold rush". In 2001 alone, the European Patent Office received more than 10,000 telecoms-related patent applications - more than for any other industrial area.

Such a situation is not healthy for the future of W-CDMA or any other emerging technology. When the risk of accidentally infringing a patent becomes too great then investment will move elsewhere. Standard-setting bodies quickly recognized this danger. The European Telecommunication Standards Institute (ETSI), responsible for finalizing UMTS, now requires all submitted proposals to be accompanied by public declarations of so-called "essential" IP. ETSI also mandates that all essential IP must be licensed on fair terms, to prevent owners abusing their monopoly rights by overcharging for licences.

Licensing hurdles

However, it is clear that these measures do not go far enough and there is still a vast number of essential patents for potential licensees to negotiate around. For example, US-based Qualcomm has made 1583 UMTS declarations to ETSI. Consequently, any operator of a 3G wireless system and any manufacturer of 3G equipment, regardless of the particular radio-interface technology it adopts, will need to get licenses from multiple-patent holders and may need licenses for a large number of patents. When all parties have taken their slice, this cumulative royalty rate could be prohibitive. The issue is further complicated because not all essential patents actually encompass core technology (see "Webb on Wireless" November 2002).

Recent developments have offered a way forward, though. In November 2002, the European Commission (EC) gave telecoms companies permission to establish five patent licensing and evaluation structures - referred to as patent platforms. According to the EC, these will "help streamline the licensing of essential patents, reduce license fees for the patents, and aid in the rapid introduction of third-generation wireless services". The patent platforms were implemented by the 3G Patent Platform Partnership (3G3P), which comprises eight operators and 11 manufacturers and began operating last month. 3G3P will identify, with a high degree of credibility within the industry, patents that are technologically essential for the manufacture of 3G products, such as terminals and base stations.

Also last November, in another encouraging development for W-CDMA, industry-leaders NTT DoCoMo, Ericsson, Nokia and Siemens introduced licensing arrangements that mean essential patents for W-CDMA are licensed at rates proportional to how many essential patents are owned by each company. The aim is to set a benchmark for all holders of W-CDMA technology patents, to achieve fair and reasonable royalty rates and to keep the cumulative royalty rate below 5%.

What's the alternative?

But is this accumulation of IP the best way forward? In 1999, a seemingly intractable situation arose when Qualcomm and Ericsson of Sweden refused to comply with the International Telecommunication Union's requirement that contributors to the standard-setting process must commit to licensing their IP on fair terms. The two companies held key patents in the CDMA air interface, and the standard could therefore not be finalized until an agreement was reached. IP is also expensive - a single global patent can cost €150,000, and this figure is dwarfed by the cost of enforcing a patent in court.

Alternatives to patents do exist, such as "copyleft", where standards-related information is made freely available, and open standards. Copyleft has worked well for many Internet standards, which have rapidly become de facto by consensus. The Symbian operating system is a good example of an open standard. Symbian, owned by a consortium of industry leaders, has achieved a dominant market position by allowing developers free access to its mobile operating system for terminals.

The key players that are moving W-CDMA forward have realized that co-operation is essential to achieve the delicate balance between recouping investment and encouraging growth. In the field of 3G, where several platforms are vying for superiority, finding this balance is crucial.
About the author

Ben Williams is a UK-based freelance journalist specializing in IP

http://wireless.iop.org/articles/news/4/2/4/1