teecee.. for starters, Cisco may want to consider that at the time NOK proposed their 5% royalty cap in May 2002, they had agreed to pay QCom about 4% IPR licensing fees one year earlier, meaning only one percent remained for all other WCDMA contributors, including Idcc and all cross-licensors. Contrary to open source wireless industry press assessments, Nokia sponsored WCDMA IPR royalties among participating (cross-licensing) manufacturers, were limited to a max of under one percent for all contributing non-manufacturers, after factoring in about 4% to QCOM.
Taken one step further, what resulted was a group of major competing manufacturers,including NEC, all currently licensed by QCom at approx 4% (using analyst estimates), colluding among themselves to effectively cross-license WCDMA products at a cumulative IPR royalty rate of effectively ZERO.
In effect, actions by the manufacturer cartel plus Docomo collectively targeted non-manufacturers, particularly Interdigital, since all participating (and most non-participating) manufacturers already were paying 80% of the so-called 5% royalty cap to QCOM. (In the May 2002 Nokia press release posted below, the term "vendor" was universally used to connote industry wide solidarity among "most" WCDMA non-manufacturers and manufacturers, more than likely to falsely create the illusion the 5% cap was agreed upon to account for differential WCDMA essential patent contributions primarily among numerous competing manufacturers.)
QCOM and Interdigital ultimately disagreed with the royalty cap proposal. Interdigital may or may not realize the significance of the 5% royalty cap in conjunction with ongoing deliberations with Nok and ultimately Samsung.
The colluding cartels principal concern was non-manufacturer Interdigital, could justifiably command higher IPR rates than 1 percent, based on extensive wideband TDD and FDD research and associated patent filings dating back to the BCDMA alliance with Siemens and Alcatel.The cartel was equally fully aware that Interdigital at the time was seeking up to 3% from financially weak Ericsson, and if sucessful, would establish the NOK's 2G royalty rate,as well as a an even higher benchmark for all other manufacturers who could not achieve NOK's rapidly increasing 2G handset volumes.
Since the royalty cap was agreed on in November 2002, none of the non-licensed signees subsequently licensed with Interdigital (although this should change following the ICC award favoring Interdigital (and the frivilous assessment of NOK's appeal). In July 2003, four months following settlement with E/SE, Nokia embarked on protracted campaign, first involving the ICC, followed by court actions in Texas, NC, Delaware, and finally the August 1 NY District Court appeal of the 232-252 million ICC award.
CSCO may also want to consider whether collective arbitration and follow-up actions taken by NOKIA to negate 1999 PLA licensing terms were addressed by the cartel prior to initiation of ICC arbitration in July 2003.
CSCO buying non-manufacturer IDCC as opposed to Nopkia makes more sense.... but ?????
Note below posted cartel price fixing similarities to NOKIA sponsored royalty cap as applied to non-manufacturer Interdigital, with special emphasis on the protracted role of international courts to eliminate or minimize ipr royalty payments under their 2G PLA, as well as performance of other non-licensed signees with respect to 3G licensing: Docomo, Ericsson, Nokia, Siemens, along with Japanese manufacturers Fujitsu, Matsushita Communication Industrial (Panasonic), Mitsubishi Electric, Sony Corporation ... it is uncertain whether additional participant NEC divulged their 3G IPR royalty payments to the cartel... while Samsung was not listed as a participant, they had a chip supplier relationaship with NOK, and subsequently joined with NOK in filing arbitration with Interdigital
----------------------------------------------- Infineon fined for price fixing
Munich based Infineon has 32,000 employees German microchip maker Infineon Technologies has been fined $160m(131m euros,£90m)by a US court after pleading guilty to one count of price-fixing. The US Department of Justice(DoJ) said Infineon, had taken part in an "international conspiracy" to fix prices between 1999 and 2002.
The firm has agreed to co-operate with the Department in its investigation into the pricing of memory chips.
The penalty is the largest criminal fine in a DoJ case in three years.
Cartel message
Infineon said it had pleaded guilty to a "single and limited" charge of violating US antitrust laws.
The firm added that it was in the process of reaching settlements with all affected customers.
"Infineon strongly condemns any attempt to fix or stabilise prices and is committed to vigorous and fair competition based solely on superior products and services," the firm said in a statement.
This case sends the message that high-tech price-fixing cartels will not be tolerated
John Ashcroft, US Attorney General
The felony charge, filed in San Francisco, alleged that Infineon and other unnamed companies conspired to fix prices of dynamic random access memory(dram) chips over a three year period.
These are the most commonly used semiconductor memory products.
"This case sends the message that high-tech price-fixing cartels will not be tolerated," said US Attorney General John Ashcroft.
Infineon, whose US operation is based in San Jose, California, has more than 32,000 employees and recorded sales worth 6.15bn euros in 2003.
The firm was once part of industrial giant Siemens.
Nokia sees 5% as the optimal cumulative royalty rate to encourage growth and innovation in the industry
Highlighting the fact that WCDMA technology has been adopted by the vast majority of mobile operators worldwide and is fast emerging as the global standard of choice for 3G, Nokia is advocating an industry-wide commitment that royalty rates for the 3G technology should not exceed 5% cumulatively. Under this proposal no manufacturer should pay more than 5% royalties covering all essential WCDMA patents from all patent holders.
With thousands of WCDMA base stations already deployed by network suppliers -- and more being installed every day -- Nokia sees the 3G market moving ahead with full speed and feels that setting a target for cumulative royalty rates for WCDMA patents at 5% will further promote the growth of the mobile industry, support sustainable competitive business opportunities, and usher in a new and exciting era of mobile services and applications.
"We believe that it is of utmost importance for the mobile communication industry that the cumulative royalty cost of WCDMA is maintained at a healthy level, that is, at a maximum of five percent," says Dr. JT Bergqvist, Senior Vice President, Nokia Networks. "In our opinion, this is the level of royalties that encourages greater growth and innovation in the industry."
Nokia is the number one IPR holder in the WCDMA standard and technology, with more than 25% of the essential patents registered so far with the European Telecommunications Standards Institute (ETSI), Association of Radio Industries and Businesses (ARIB), and Telecommunications Technology Committee (TTC) standardization bodies. Nokia is committed to licensing its essential patents under fair, reasonable and non-discriminatory terms, subject to reciprocity.
With licensing arrangements already in place with several major companies, Nokia is continuing active discussions with a number of parties with the aim of reaching reasonable and sustainable license arrangements. Nokia's position and belief is that proposed five percent cumulative royalty level has been well received and supported by most major vendors and operators. Because the 5% cumulative royalty will make WCDMA technology very competitive also from the IPR point of view, it keeps the standard open for all contributing companies to join.
Nokia is the world leader in mobile communications. Backed by its experience, innovation, user-friendliness and secure solutions, the company has become the leading supplier of mobile phones and a leading supplier of mobile, fixed broadband and IP networks. By adding mobility to the Internet, Nokia creates new opportunities for companies and further enriches the daily lives of people. Nokia is one of the most broadly held companies in the world with listings on six major exchanges. www.nokia.com http://press.nokia.com/PR/200205/858681_5.html
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NOKIA Press Release
Industry leaders NTT DoCoMo, Ericsson, Nokia and Siemens, and Japanese manufacturers reach a mutual understanding to support modest royalty rates for the W-CDMA technology worldwide
November 06, 2002
Ensures fair and competitive pricing for W-CDMA handsets and infrastructure equipment
Industry leaders NTT DoCoMo, Ericsson, Nokia and Siemens today reached a mutual understanding to introduce licensing arrangements whereby essential patents for W-CDMA are licensed at rates that are proportional to the number of essential patents owned by each company. The intention is to set a benchmark for all patent holders of the W-CDMA technology to achieve fair and reasonable royalty rates.
The companies together own the clear majority of the essential Intellectual Property Rights (IPR) relevant to the W-CDMA standard selected already by about 110 operators worldwide. This arrangement would enable the cumulative royalty rate for W-CDMA to be at a modest single digit level.
The above companies also own a significant number of the essential patents applicable to the CDMA2000 standard. These patents will be licensed at fair and reasonable terms.
Industry leaders NTT DoCoMo, Ericsson, Nokia and Siemens, and Japanese manufacturers reach a mutual understanding to support modest royalty rates for the W-CDMA technology worldwide November 06, 2002
“It is of the utmost importance for the mobile communication industry and in the interest of both licensors and licensees that the cumulative royalty cost of W-CDMA is maintained at a competitive level which encourages both greater growth and innovation in the industry,” says Lothar Pauly, board member of the Siemens Information and Communication Mobile Group. “As we - the major IPR holders – make our patents available we ensure that W-CDMA stays an open and globally acceptable technology."
“This initiative means that cumulative royalty rates of W-CDMA are kept at a healthy level. For example according to the recent developments in China the cumulative royalty rate seems to remain even under our earlier targetted cumulative 5% level. This makes the W-CDMA standard safe to invest in for operators, manufacturers and application developers,” says Yrjö Neuvo, Executive Vice President of Nokia. “We can see the IPR initiative gaining support amongst the industry, and encourage others to join.”
“W-CDMA is the standard selected by most operators in the world for their future business, and with this initiative we believe the cumulative royalty will be even lower for W-CDMA than GSM, which has enjoyed unrivalled success compared to any other standard in the world says Torbjorn Nilsson, Senior Vice President Marketing & Strategic Business Development of Ericsson.
“This initiative is meaningful for promoting the W-CDMA services by keeping cumulative royalty rate below 5%,” says Kota Kinoshita, Executive Vice President of NTT DoCoMo. “We have discussed through the 3G Patent Platform Partnership (3G3P) how to license essential patents at acceptable royalty rates. We believe the intent of the arrangement is well harmonized with that of 3G3P.”
The W-CDMA standard is developed by the 3rd Generation Partnership Project (3GPP). In the 3GPP standardization process the declaration of essential IPRs is mandatory. The European Telecommunications Standards Institute (ETSI) and the Association of Radio Industries and Businesses (ARIB) in Japan maintains an updated list of IPR declarations for 3GPP.
NTT DoCoMo is the world’s leading mobile communications company with more than 44 million customers. The company provides a wide variety of leading-edge mobile multimedia services. These include i-mode®, the world’s most popular mobile internet service, which provides e-mail and internet access to over 35 million subscribers, and FOMA®, launched in 2001 as the world’s first 3G mobile service based on W-CDMA. In addition to wholly owned subsidiaries in Europe and North and South America, the company is expanding its global reach through strategic alliances with mobile and multimedia service providers in the Asia-Pacific, Europe and North and South America. NTT DoCoMo is listed on the Tokyo (9437), London (NDCM), and New York (DCM) stock exchanges. For more information, visit www.nttdocomo.com i-mode and FOMA are trademarks or registered trademarks of NTT DoCoMo, Inc. in Japan and other countries.
Nokia is the world leader in mobile communications. Backed by its experience, innovation, user-friendliness and secure solutions, the company has become the leading supplier of mobile phones and a leading supplier of mobile, fixed broadband and IP networks. By adding mobility to the Internet Nokia creates new opportunities for companies and further enriches the daily lives of people. Nokia is a broadly held company with listings on six major exchanges.
Ericsson is shaping the future of Mobile and Broadband Internet communication through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world. Read more at www.ericsson.com/press
The Siemens Information and Communication Mobile Group (Siemens mobile) offers the complete range of mobile solutions including mobile devices, infrastructure and applications. Devices include mobile phones, wireless modules, mobile organizers and cordless phones as well as products for wireless home networks. The infrastructure portfolio includes GSM, GPRS and 3G mobile network technologies from base stations and switching systems to intelligent networks, e.g. for prepaid services. Mobile Applications cover end-to-end solutions for Messaging, Location Based Services or Mobile Payment. You can access further information about Siemens mobile on the Internet at www.siemens-mobile.com
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