InterDigital Inc (IDCC)

[nieves]

IDCC Mentioned:Cell Phone Makers Face Higher Royalties



By Kim Tae-gyu
Staff Reporter
Korean mid-tier cell phone manufacturers are in a quandary over how to react to patent holders demanding high royalties for the use of their technologies.

InterDigital Communications, a U.S.-based mobile technology firm, now requires Korean handset makers to pay 2 percent of cell phone prices in royalty despite having just a handful of patents.

An official of a domestic mid-tier handset maker, who wanted to be identified just by his surname Song, yesterday said InterDigital is causing a industry-wide royalty woes with its request in Korea.

``InterDigital demanded the technology usage fee early this year and stepped up its pressure again of late after making deals with Nokia,’’ Song said.

InterDigital recently sealed a licensing agreement with Nokia, the world’s foremost cell phone manufacturer, covering terminal units of the global system for mobile communications (GSM).

GSM, predominant in Europe, is a mainstream, worldwide wireless telephony technique with code division multiple access (CDMA).

``InterDigital has just a few patented source technologies in GSM and some applied techniques, for which less than 0.5-percent royalty would be proper,’’ Song said.

Song said his company can make a cross-license deal with other patent holders on the back of its own patented technologies, which the other players also need to make cell phones. But that is not the case with InterDigital.

InterDigital does not make terminals so handset makers cannot challenge it. If the firm wants to rebuff critics, it can create a downswing in handset production in any headset manufacturer.

``Nokia recently gave in to InterDigital. And we learned Samsung also signed a deal with it. How can second-string companies like us confront a corporation, which even bigger players cannot challenge?’’ Song asked.

Samsung, the world’s third-largest cell phone maker, declined to confirm that it had made a patent-licensing contract with InterDigital.

Song said patent holders other than InterDigital are also attempting to gain royalty revenues from Korea’s mid-sized handset producers.

``Siemens has asked for 1.5 percent in technology usage fees and Lucent Technologies are also squeezing Korean makers to get royalties. If we accept all the demands, we cannot continue our business,’’ Song said.

Yi Cheol-sang, chief executive of Korea’s handset vendor VK, also said during a recent interview with The Korea Times that the royalty nightmare is becoming real.

``Up until now, we could counter royalty threats based on our source technologies. But actually we do not have weapons against some patent holders that do not produce mobile phones,’’ Yi said.



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10-17-2005

http://times.hankooki.com/lpage/tech/200510/kt2005101718201511800.htm