Qualcomm Technologies (CDMA ++ ) and Lawsuits Qualcomm v. Broadcom Qualcomm v. Motorola Qualcomm v. Nokia Qualcomm v. Ericsson
Jesus Castellanos Gonzalez and Agustin Antonio Del Rio Oropeza
Major: Industrial Engineering
Class: UC Berkeley IEOR 190 G
Dr. Tal Lavian, Fall 2008
These slides are available at http://www.cs.berkeley.edu/~tlavian/courses.html
Broadcom, Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments welcome the continuation of the investigation by the European Commission into complaints regarding anti-competitive practices by Qualcomm.
The companies believe that these practices are harmful to the mobile telecommunications industry globally and, in particular undermine confidence in standards-setting processes, threaten the supply of WCDMA chipsets, impede innovation, and raise the costs of third-generation (3G) technology and handsets. As a result, carriers and consumers face higher prices and fewer choices.
Qualcomm is a pioneer of the use of code-division multiple access (CDMA) technology in wireless communications. It also holds several key patents and was in the middle of negotitations in the 1990s over the adoption of a family of standards, all based on CMDA, for the third-generation of mobile communications technology.
BASEBAND SHIPMENTS BY VENDOR
In July 1985, seven industry veterans came together to discuss an idea.
They wanted to build “QUALity COMMunications” and outlined a plan that has evolved into one of the telecommunications industry’s greatest start-up success stories: Qualcomm Incorporated.
Qualcomm’s current intellectual property portfolio includes more than 7,200 United States patents for wireless technologies , with more than 145 telecommunications equipment manufacturers licensing them worldwide and more than 20,000 patents and applications around the globe.
QUALCOMM has entered into more than 130 royalty-bearing license agreements with the world’s leading telecommunications equipment makers and consumer electronics manufacturers.
QUALCOMM’s extensive licensing program has fostered the widespread adoption of leading-edge technologies and promoted vibrant competition throughout the wireless industry, encouraging innovation and technological advancement. QUALCOMM is prepared to offer licenses under its essential GSM/GPRS/EDGE patents on fair and reasonable terms free from unfair discrimination to any company that requests one.
Using our nationwide two-way satellite link, you can rapidly locate your trucks anywhere and contact them anytime. The OmniTRACS system helps fleets improve productivity, reduce operating costs, enhance customer service, and increase security.
The electromagnetic energy, which is a mixture of electricity and magnetism, travels
past you in waves like those on the surface of the ocean. These are called radio waves.
Number of vibrations per second is called frequency and is measured in hertz (Hz).
f = 1 / T
Analog Radio vs Digital Radio
The difference between CDs and Records.
Analog: Signals from huge transmitter antennas, which are connected to the radio station, to the smaller antenna on your radio set.
Modulation: a program is transmitted by adding it to a radio wave called a carrier
Analog Radio : FM/AM radio signals for example.
All FM/AM transmissions are plagued by interference caused by buildings, mountains, airplanes, and even weather conditions.
The trouble with AM and FM is that the program signal becomes part of the wave that carries it. So, if something happens to the wave en-route, part of the signal is likely to get lost.
External, telescopic FM antenna
AC power input
Internal AM antenna
AM radio uses amplitude modulation, in which the amplitude of the transmitted signal is made proportional to the sound amplitude captured (transduced) by the microphone while the transmitted frequency remains unchanged.
Mobile phones transmit to a local cell site (transmitter/receiver) that ultimately connects to the public switched telephone network ( PSTN the internet of cell phones ) through an optic fiber or microwave radio and other network elements. When the mobile phone nears the edge of the cell site's radio coverage area, the central computer switches the phone to a new cell. Cell phones originally used FM, but now most use various digital modulation schemes.
Digital radio offers many advantages over analog, including improved voice quality at greater range, better privacy, sophisticated call-control features, the ability to easily integrate with data systems, and more.
Digital technology provides better noise rejection and preserves voice quality over a greater range than analog.
DAB is revolutionary because inside the receiver is a computer which sorts through the countless multipath signals and other distortions to enhance the main signal.
It simply sorts out the main signals and ignores any reflections that it may be receiving.
The best part is that DAB is flexible. Supposing that normally six stereo program channels, can be transmitted in a DAB ensemble at a time, some programs will require less audio data (for e.g. talk shows or news broadcasts) while some will require more data (for e.g. music or concerts).
Each strives to better utilize the radio spectrum by allowing multiple users to share the same physical channel. You heard that right. More than one person can carry on a conversation on the same frequency without causing interference. This is the magic of digital technology.
Qualcomm sells CDMA technology to companies like Kyocera, Motorola, Sharp, Sanyo, LG and Samsung
Qualcomm owns most of the worldwide patents on the CDMA technology that powers Telecom New Zealand's 027 mobile network and its new CDMA2000 1X network
Thought Qualcomm wasn’t selling their technology to enough of the market
Qualcomm then sued Nokia for using their technology in new versions of GSM
This is more or less how digital radio works:
The transmitter sends program signals broken into fragments and coded in numbers (digits).
The transmitter sends each fragment many times to increase the chances of it getting through.
Even when things interrupt or delay some of the fragments, the receiver can still piece together fragments arriving from other places and put them together to make an uninterrupted program signal.
Switch on your digital radio and it...
Collects fragments of radio signals flying through the air.
Sorts through and reassembles the fragments in order to make a complete program.
This process takes some time. Put a digital radio and an ordinary analog radio next to one another and turn them both on together. You'll find the sound from the digital radio lags noticeably behind the sound from the analog radio because of the time it takes to reassemble the digital signal!
Advantages of Digital Two-Way Radio
Channels that historically carried a single call at a time are now being divided so they can carry two.
Frequency-Division Multiple Access (FDMA) splits the channel frequency into two smaller sub-channels that can carry separate calls side-by-side.
Frequency-Division Multiple Access (FDMA) splits the channel frequency into two smaller sub-channels that can carry separate calls side-by-side. Time-Division Multiple Access (TDMA) preserves the full channel width, but divides it into alternating time slots that can each carry an individual call.
First generation analog cellular technologies
• analog FM speech
• FSK signalling
• cell sizes 0.5-10 km
• mobile power 1W-8W
• frequency reuse
Second generation digital cellular technologies
• For the second generation, data and digitized voice appeared in the system.
The mobile handset samples the voice signal and sends digital data through the air. Also, channels may be shared.
• GSM (Europe, TDMA)
• DCS 1800 (Europe, similar to GSM)
• PCS 1800 (US)
• Digital AMPS: IS-54 in US (TDMA)
• Cellular CDMA: IS-95 in US
• PDC (Japan, TDMA)
CDMA is the main technique used in Third-generation systems. The different implementations are:
• TDMA: TDD
• FDMA: DECT+
From these, CDMA2000 (also known as IS-856) supports data transfers through what is called 1x EVDO (same chipping rate, EVolution, Data- Only) and HSDPA. It supports 3Mbps and 1Mbps data rates.
Future Technologies (Third generation)
• Provide a seamless radio infrastructure
• Customer should see services, not technology!
• Maximize commonality of radio interfaces
• Enable cost-effective dual mode operation
• Universal personal mobility
• Evolution from 2nd generation technologies
Time-Division Multiple Access (TDMA)
TDMA is a technology that allows multiple conversations to share the same radio channel.
Preserves the full channel width, but divides it into alternating time slots that can each carry an individual call.
Provides advantages of feature flexibility, lower equipment costs, longer battery life, future-readiness, and the proven ability to increase spectral efficiency without risking increased congestion or radio channel interference.
Time-Division Multiple Access (TDMA)
TDMA-based radios can work within a single repeater channel to provide roughly twice the capacity of analog while offering RF performance equivalent to, or better than, today’s analog radio.
TDMA offers a proven way to enable 6.25 kHz equivalent efficiency in licensed 12.5 kHz repeater channels. This doubles per-channel communications capacity, while satisfying future regulatory requirements for 6.25 kHz equivalent efficiency.
minimizing investments in repeaters and combining equipment
In reality, only one person is actually using the channel at any given moment, but he or she only uses it for short bursts. He then gives up the channel momentarily to allow the other users to have their turn. This is very similar to how a computer with just one processor can seem to run multiple applications simultaneously.
GSM is an implementation of TDMA
Provides 8 slots in a channel 200 kHz wide
iDEN is an implementation of TDMA too
Provides 3 slots in a channel only 25 kHz wide
Short for G lobal S ystem for M obile Communications, GSM is a digital cellular communications system. It was developed in order to create a common European mobile telephone standard but it has been rapidly accepted worldwide. GSM is designed to provide a comprehensive range of services and features to the users not available on analogue cellular networks and in many cases very much in advance of the old public switched telephone network (PSTN). In addition to digital transmission, GSM incorporates many advanced services and features like worldwide roaming in other GSM networks.
The idea of cell-based mobile radio systems appeared at Bell Laboratories (in USA) in the early 1970s.
Mobile cellular systems were introduced in the 1980s.
Analog cellular telephone systems experienced a very rapid growth in Europe: Scandinavia, UK, France and Germany.
Each country developed its own system (incompatible), which was an undesirable situation for the following reasons:
The equipment was limited to operate only within the boundaries of each country, which in a unified Europe were increasingly unimportant.
The market for each mobile equipment was limited, so economies of scale, and the subsequent savings, could not be realized.
In order to overcome these problems, the Conference of European Posts and Telecommunications (CEPT) formed, in 1982, the Group Special Mobile Global System for Mobile (GSM) in order to develop a pan-European mobile cellular radio system. The standardized system had to meet certain criteria:
Good subjective speech quality
Support for international roaming
Ability to support handheld terminals
Support for range of new services and facilities
Low mobile and base stations costs
Compatibility with other systems such as Integrated Services Digital Network (ISDN)
In 1989 the responsibility for the GSM specifications passed from the CEPT to the European Telecommunications Standards Institute (ETSI).
The commercial use of GSM started around mid-1991.
1994 = 1.3 million subscribers worldwide. By the beginning of 1995 = 60 countries with operational or planned GSM networks in Europe, the Middle East, the Far East, Australia, Africa, and South America, with a total of over 5.4 million subscribers.
1997= GSM service was in 100 countries.
Presently, GSM networks are operational or planned in over 80 countries around the world.
ARCHITECTURE OF THE GSM NETWORK
The GSM mobile telephony service is based on a series of contiguous radio cells which provide complete coverage of the service area and allow the subscriber operation anywhere within it.
The functional architecture of a GSM system can be broadly divided into:
- Mobile Station
- Base Station Subsystem
- Network Subsystem
The subscriber carries the mobile station ; the base station subsystem controls the radio link with the Mobile Station. The network subsystem , which is the main part of which is the Mobile services Switching Center, performs the switching of calls between the mobile and other fixed or mobile network users, as well as management of mobile services, such as authentication.
TDMA vs CDMA
TDMA divides the channel in frequency and time-domain (narrowband)
CDMA uniquely encodes and transmits calls across entire spectrum
Spread Spectrum: can overlap multiple calls on the same channel
TDMA operates on four frequencies
Switch to determine handoff
CDMA doesn’t assign a specific frequency to each user, all on SAME frequency
TDMA vs CDMA
CDMA users will frequently see markedly lower signal levels indoors than a GSM user will, but in the end it all works out about the same.
CDMA does have one peculiarity concerning in-building penetration that does not affect TDMA
Each technology essentially achieves the same goal, but by using different methods.
To understand better…
CDMA consistently provides better capacity for voice and data communication
Analogy: a room full of people trying to have one-on-one conversations
TDMA: Each couple takes turns saying one sentence
CDMA: All speak at the same time but in different languages
CDMA has traditionally been faster than GSM
Important for data transfer
Pressure for others to stay competitive
CDMA on the hand really does let everyone transmit at the same time. Conventional wisdom would lead you to believe that this is simply not possible. Using conventional modulation techniques, it most certainly is impossible. What makes CDMA work is a special type of digital modulation called "Spread Spectrum". This form of modulation takes the user's stream of bits and splatters them across a very wide channel in a pseudo-random fashion. The "pseudo" part is very important here, since the receiver must be able to undo the randomization in order to collect the bits together in a coherent order.
Code Division Multiple Access
As opposed to TDMA (time-division)
Strives to better utilize the radio spectrum by allowing multiple users to share the same physical channel
Originally created by military during WWII to make it harder for enemies to intercept radio signals
Qualcomm was first to commercialize the technology
A big problem facing CDMA systems is channel pollution - too many base stations are present at the subscriber's phone - audio quality degrades rapidly.
Connect mobile to the
(if many available)
US 4901307 Invention to utilizing CDMA spread spectrum signals with multiple beam phased arreay repeater antennas, voice or data activity switching, adjustable user terminal power control, and L frequency band communication links
Communication System repeater Central stations terminal terminal
Present invention Increase capacity Maximum capacity is achieved when Eb/No of every user is at the minimum level needed for the acceptable channel performance.
Ex W = 8 MHz spectrum bandwidth E R = 5 MHz information signal bandwidth Prodessing gain of 32 dB I/S = ? 27 dB This means (I + S) total number of users is approx 500 under these conditions ( all users under the same)
A population of 2326 could have the same interference as 500 users Factor Typical US
Handover occurs when a call has to be passed from one cell to another as the user moves between cells. In a traditional "hard" handover, the connection to the current cell is broken, and then the connection to the new cell is made. This is known as a "break-before-make" handover. Since all cells in CDMA use the same frequency, it is possible to make the connection to the new cell before leaving the current cell. This is known as a "make-before-break" or "soft" handover. Soft handovers require less power, which reduces interference and increases capacity . Mobile can be connected to more that two BTS the handover. "Softer" handover is a special case of soft handover where the radio links that are added and removed belong to the same Node B.
Spread Spectrum is a means of transmission in which the data sequences occupy a bandwidth in excess of the minimum bandwidth necessary to send it. Spread Spectrum is accomplished before transmission through the use of a code that is independent of data sequences .The same code is used at the receiver to despread the received signal so that the original data sequence may be recovered.
MULTIPATH AND RAKE RECEIVERS
Allowed by Spread Spectrum
One of the main advantages of CDMA systems is the capability of using signals that arrive in the receivers with different time delays. This phenomenon is called multipath. FDMA and TDMA, which are narrow band systems, cannot discriminate between the multipath arrivals, and resort to equalization to mitigate the negative effects of multipath. Due to its wide bandwidth and rake receivers, CDMA uses the multipath signals and combines them to make an even stronger signal at the receivers. CDMA subscriber units use rake receivers. This is essentially a set of several receivers. One of the receivers (fingers) constantly searches for different multipaths and feeds the information to the other three fingers. Each finger then demodulates the signal corresponding to a strong multipath. The results are then combined together to make the signal stronger.
BROADCOM (THE COMPANY)
Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry's broadest portfolio of state-of-the-art, system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything.
Broadcom was founded in 1991 by Henry T. Nicholas III, Ph.D. and Henry Samueli, Ph.D. with the vision of enabling broadband communications by leveraging their combined 35 years of communications IC experience obtained at TRW in the military communications industry, at UCLA in the academic research community and at PairGain Technologies in the commercial telecommunications industry.
Broadcom is one of the world's largest fabless semiconductor companies, with 2007 revenue of $3.78 billion, and holds over 2,600 U.S and 1,200 foreign patents, more than 7,450 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.
Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5000 or at www.broadcom.com .
Broadcom believes that one of our key competitive advantages is our broad base of core technologies encompassing the complete design space from systems to silicon. We have developed and continue to build on the following technology foundations:
Proprietary communications systems algorithms and protocols.
Advanced DSP hardware architectures.
System-on-a-chip design methodologies and advanced library development for both standard cell and full-custom integrated circuit design.
High-performance radio frequency, analog and mixed-signal circuit design using industry-standard CMOS processes
High-performance custom microprocessor architectures and circuit designs
Extensive software reference platforms to enable complete system-level solutions
Broadcom focuses on delivering semiconductor solutions for communications to the home, enterprise and mobile markets. Our diverse product portfolio includes:
Bluetooth® short-range wireless products for PCs, mobile phones, PDAs, keyboards, mice and automotive electronics.
Broadband network processor solutions performing complex network routing and traffic management for storage, metropolitan, and wide area networks.
Digital cable products for cable modems, digital cable television set-top boxes, personal video recording, cable modem termination systems and residential broadband gateways.
DSL high-speed access chipsets for both central office and customer premises equipment.
Mobile multimedia processors for mobile phones and handheld platforms that include mobile TV, camcorder, and digital camera capabilities.
Mobile phone solutions for WCDMA/EDGE/GPRS/GSM phones and PC cards.
Voice over IP (VoIP) solutions for deployment in enterprise IP phones, residential terminal adapters, voice-enabled cable/DSL residential gateways and Wi-Fi® phones.
Wireless Local Area Network (WLAN) Wi-Fi 802.11a/b/g solutions for client devices, PCs, access points, broadband modems and routers.
Mobile Wireless Telephony and the UMTS Standard.
Mobile wireless telephony is the term for describing the technology and equipment used in the operation of cellular telephones.
A cellular contains “chipsets” – the core electronics that allow it to transmit and receive information via radio waves, to cellular base stations. It is essential that all components involved in this transmission of information be able to communicate seamlessly with one another.
In mobile wireless telephony, standards, necessary to ensure their interoperability, are determined privately by industry groups known as standards determining organizations (“SDOs”).
TWO TECHNOLOGY FAMILIES OF STANDARDS
TECHNICAL COMPONENTS OF GSM COMMUNICATION
The standard used in GSM-path networks is the third generation (“3G”) standard created for the GSM path, and is known as the Universal Mobile Telecommunications System (“UMTS”) standard.
The UMTS standard was created by the European Telecommunications Standards Institute (“ETSI”) and its SDO counterparts in the United States and elsewhere after a lengthy evaluation of available alternative equipment and technologies.
Qualcomm supplies some of the essential technology that the ETSI included in the UMTS standard, and holds intellectual property rights (“IPRs”), such as patents, in this technology. The ETSI requires a commitment from vendors whose technologies are included in standards to license their technologies on fair, reasonable, and non-discriminatory (“FRAND”) terms (not defined).
Broadcom alleged that Qualcomm was a member of the ETSI and committed to abide by its IPR policy. Specifically, Broadcom alleged, the ETSI included Qualcomm’s proprietary technology in the UMTS standard only after, and in reliance on, Qualcomm’s commitment to license that technology on FRAND terms. The technology in question is called Wideband CDMA (“WCDMA”), not CDMA technology path. WCDMA technology is essential to the practice of the standard.
PATENT # 5,576,767 (INTERFRAME VIDEO ENCODING AND DECODING SYSTEM)
B) Broadcom’s complaint
Broadcom filed this action in the U.S. District Court for the District of New Jersey on July 1, 2005, and filed its First Amended Complaint (the “Complaint”) shortly thereafter.
The Complaint alleged that Qualcomm induced the ETSI and other SDOs to include its proprietary technology in the UMTS standard by falsely agreeing to abide by the SDOs’ policies on IPRs, but then breached those agreements by licensing its technology on non-FRAND terms.
The intentional acquisition of monopoly power through deception of an SDO, Broadcom posits, violates antitrust law. The Complaint also alleged that Qualcomm ignored its FRAND commitment to the ETSI and other SDOs by demanding discriminatorily higher (i.e., non-FRAND) royalties from competitors and customers using chipsets not manufactured by Qualcomm.
Qualcomm, the Complaint continued, has a 90% share in the market for CDMA-path chipsets, and by withholding favorable pricing in that market, coerced cellular telephone manufacturers to purchase only Qualcomm-manufactured UMTS-path chipsets.
These actions are alleged to be part of Qualcomm’s effort to obtain a monopoly in the UMTS chipset market because it views competition in that market as a long-term threat to its existing monopolies in CDMA technology. Broadcom claims to have been preparing to enter the UMTS chipset market for several years prior to its filing of the Complaint. After Broadcom purchased Zyray Wireless, Inc., a developer of UMTS chipsets, Qualcomm allegedly demanded that Broadcom license Qualcomm’s UMTS technology on non- FRAND terms. Broadcom refused, and commenced this action. Qualcomm also allegedly acquired Flarion Technologies, a competitor in the development of technologies for inclusion in the forthcoming B3G and 4G standards, in an effort to extend Qualcomm’s monopolies into future generations of standards.
C) The District Court’s Opinion
The Court dismissed Broadcom’s claim:
Referring that Qualcomm was attempting to obtain a monopoly in the UMTS chipset market by exploiting its monopolies in WCDMA technology and CDMA-path chipsets for not providing “information on the composition or dynamics of the market for UMTS chipsets to enable the Court to infer that Qualcomm’s conduct is anticompetitive”.
For unlawful maintenance of monopoly, reasoning that the combination of patent rights and an industry-wide standard foreclosed the possibility of unlawful monopoly, and that the Complaint did not describe the composition of the 3G CDMA chipset market in sufficient detail.
For unlawful monopolization in the WCDMA technology markets, the Court reasoned that Qualcomm enjoyed a legally-sanctioned monopoly in its patented technology, and that this monopoly conferred the right to exclude competition and set the terms by which that technology was distributed.
For unlawful tying and exclusive dealing, finding that Qualcomm’s mere refusal to offer discounts and market incentives to potential licensees who did not purchase Qualcomm chipsets was neither coercive nor an unlawful agreement not to use a competitor’s goods that foreclosed a substantial share of commerce.
Relating to Qualcomm’s purchase of Flarion, finding Broadcom’s alleged injuries “too speculative”.
Absent a federal claim, the Court declined to exercise supplemental jurisdiction over the remaining state and common-law claims, and dismissed the Complaint with leave to amend. Choosing to stand on its Complaint, Broadcom filed this timely appeal.
Texas instruments is better known in the electronics industry (and popularly) as TI , is an American company based in Dallas, Texas, USA, renowned for developing and commercializing semiconductor and computer technology.
TI is the No. 3 manufacturer of semiconductors worldwide after Intel and Samsung, and is the top supplier of chips for cellular handsets, as well as the No. 1 producer of digital signal processors (DSPs) and analog semiconductors.
Other focus areas include chips for broadband modems, PC peripherals, digital consumer devices, telecommunication infrastructure, and radio frequency identification (RFID). As of 2006, the company was listed at number 167 on the Fortune 500.
Texas Instruments is also known for its values and is considered highly ethical.
Texas Instruments was founded by Cecil H. Green, J. Erik Jonsson, Eugene McDermott, and Patrick E. Haggerty in 1951. McDermott was one of the original founders of Geophysical Service in 1930. McDermott, Green, and Johnson were GSI employees who purchased the company in 1941 on the day before Pearl Harbor was attacked.
In November, 1945 Patrick Haggerty was hired as general manager of the Laboratory and Manufacturing (L&M) division. By 1951, the L&M division, with its defense contracts, was growing faster than GSI's Geophysical division. The company was reorganized and initially renamed General Instruments Inc. Because there already existed a firm named General Instrument, the company was rechristened Texas Instruments that same year.
Geophysical Service Inc. became a subsidiary of Texas Instruments which it remained until early 1988, when most of GSI was sold to the Halliburton Company.
TI manufactures application-specific integrated circuits for hand sets using CDMA and a competing wireless technology called GSM. TI, like QUALCOMM, holds numerous patents relating to digital wireless technology. TI was interested in entering into an agreement with QUALCOMM that would allow both companies to use each others’ patent portfolios. The PPA (Portfolio Agreement) provides, among other things, that:
i) TI is entitled to “most favored nation”(MFN) status,
ii) except in circumstances not relevant here, TI may not sue QUALCOMM over a pass-through rights agreement between QUALCOMM and a third party if that agreement was in existence at the time the PPA was executed;
iii) the parties are required to keep the terms of their agreement confidential; and
iv) if either party materially breaches the PPA, the other party may terminate the agreement, and still retain the use of the breaching party’s patents.
In May 2003, TI disclosed the PPA’s royalty terms to investment analysts at a
TI conference. In July 2003, QUALCOMM filed suit in the Superior Court, alleging
that TI’s disclosure to the analysts breached the PPA, and seeking a determination that
the breach was material. TI responded by filing suit against QUALCOMM in the
Court of Chancery, alleging that QUALCOMM breached the MFN provision. The
two lawsuits were effectively combined when QUALCOMM dismissed its Superior
Court action and filed a counterclaim in the Court of Chancery action.
After discovery, the parties moved for summary judgment as to various aspects
of their claims. The trial court held that:
TI breached the PPA by disclosing the royalty terms;
As a matter of New York law, that breach was not material; and
(iii) QUALCOMM did not breach the MFN provision. The Court of Chancery conducted
a trial on QUALCOMM’s remaining claim – that, by suing QUALCOMM over the
MFN provision, TI breached the litigation rights provision of the PPA. After the trial,
that Court concluded that TI did not breach that provision because the suit did not
relate to an agreement between QUALCOMM and a third party. This appeal
I. Materiality of the Confidentiality Provision
Under New York law, which governs the PPA, a breach is material if it is “so
substantial that it defeats the object of the parties in making the contract.”1 Stated
differently, the breach must “go to the root of the agreement between the parties.”2 In
deciding whether a breach is material, New York courts consider the following factors
identified in the Restatement (Second) of Contracts:
(a) the extent to which the injured party will be deprived of the benefit
which he reasonably expected; (b) the extent to which the injured party
can be adequately compensated for the part of that benefit of which he
will be deprived; c) the extent to which the party failing to perform or to
offer to perform will suffer forfeiture; (d) the likelihood that the party
failing to perform or to offer to perform will cure his failure, taking
account of all the circumstances including any reasonable assurances; (e)
the extent to which the behavior of the party failing to perform or to offer
to perform comports with standards of good faith and fair dealing.3
We are satisfied that the Court of Chancery correctly concluded that the
confidentiality provision was not material to the PPA. As the trial court noted, “the
‘ root of the agreement’ or the ‘essence of the contract’ was patent peace between
Qualcomm and TI. The agreement itself makes this abundantly clear.”
Moreover, if the Court of Chancery had evaluated all of the Restatement factors expressly, the
continues to sell, distribute and license its products without being subjected to patent
infringement litigation from TI; and (ii) QUALCOMM continues to receive royalties
from hand set manufacturers with no pass-through. Thus, the breach did not deprive
QUALCOMM of the benefit it expected from the PPA.
(b) QUALCOMM claims that it suffered a $30 million loss because another
company withdrew from negotiations over a licensing agreement after learning the
royalty terms of the PPA. Assuming that TI’s May 2003 disclosure was the reason for
the breakdown in negotiations, QUALCOMM would have been able to recover
damages from TI caused by the disclosure. QUALCOMM decided to forego its
damage remedy, however, because (it says) a trial court discovery ruling would have
forced it to reveal the confidential terms of all of its licensing agreements – a result
that would be even more damaging than TI’s wrongful conduct. But QUALCOMM
never sought review of the trial court’s discovery ruling. Instead, it simply dismissed
its damages claim shortly before the scheduled trial. Thus, on this record, it appears
that QUALCOMM could have been adequately compensated for the one transaction
that TI’s breach allegedly derailed.
For over 30 years, InterDigital has invented and developed advanced digital wireless technologies. These inventions—used in every digital cellular phone today— helped shape the wireless industry. Today, we remain at the cutting edge of tomorrow’s technology through ongoing research and development, contributing to the standards bodies, licensing our patented inventions to leading brands, and offering high-performance technologies and products.
Our Goal: Generate Revenue from Every 3G Device Shipped
Our strong financial performance is a tribute to the valuable technology we have developed over the years – and we continue to invest to maximize shareholder value. Entering the wireless chip market with dual mode baseband ASICs complements our successful patent licensing program and positions InterDigital to capitalize on the growth in the global wireless industry.
InterDigital has approximately 400 employees across its offices. The company is headquartered in King of Prussia, PA outside of Philadelphia, PA, with additional development centers in Melville, New York, and Montreal, Quebec, Canada.
ITC had filed a lawsuit against QUALCOMM alleging that certain CDMA products built by QUALCOMM in compliance with IS-95, a North American CDMA digital cellular standard, infringed three of ITC's patents. QUALCOMM had filed a lawsuit against InterDigital alleging that their Broadband-CDMA development activities infringed one of QUALCOMM's patents. Both lawsuits have been dismissed.
The settlement covers only CDMA and does not affect ITC's Time Division Multiple Access (TDMA) patent claims regarding GSM, the European Global System for Mobile Communications, or IS-54, the North American TDMA digital cellular standard, nor does it affect ITC's current patent-infringement litigation against Ericsson and Motorola with respect to IS-54.
In return for a one-time payment by QUALCOMM of $5.5 million, ITC has granted to QUALCOMM a fully paid, royalty-free, worldwide license to use and to sublicense ITC's existing CDMA patents and certain future CDMA patents to make and sell products for IS-95-type wireless applications, including, but not limited to, cellular, PCS, wireless local-loop and satellite applications.
QUALCOMM has the right to sublicense ITC's CDMA patents so that QUALCOMM's licensees will be free to manufacture and sell IS-95-type CDMA products without requiring any payment to ITC. ITC's patents concerning cellular overlay and interference cancellation are not licensed to QUALCOMM.
QUALCOMM has granted to InterDigital a royalty-free license to use and to sublicense the one patent that QUALCOMM had asserted against InterDigital and a royalty-bearing license to use certain of QUALCOMM's CDMA patents in InterDigital's B-CDMA products if needed.
InterDigital believes that it will not be necessary to use any of QUALCOMM's royalty-bearing or nonlicensed patents in its B-CDMA system.
In addition, QUALCOMM has agreed, subject to certain restrictions, to license certain CDMA patents on a royalty-bearing basis to those InterDigital customers that desire to use QUALCOMM's patents. The license to InterDigital does not apply to IS-95-type systems or to satellite systems.
Certain of QUALCOMM's patents, relating to key IS-95 features such as soft and softer hand-off, variable-rate vocoding and orthogonal (Walsh) coding, are not licensed to InterDigital.
C an a patent owner sue a competitor who is about to bring out an infringing product?
The case involved the burgeoning field of cellular telephones. Interdigital owned patents which it believed gave it control of all cellular telephones that would satisfy two of the industry-wide standards set by the Telecommunications Industry Association. It thus felt it had a lock on all cellular telephones covered by these standards that were sold in the United States.
Qualcomm was in the business of manufacturing cellular telephones and components. Qualcomm had begun developing and was beginning to market new phones under the first of the two standards. However, to Interdigital’s knowledge, Qualcomm company hadn’t made or sold a completed infringing telephone.
The Patent Statute allows patent owners to sue only those who make, use, or sell an infringing product.
Interdigital thus brought a declaratory judgment action against Qualcomm, charging that there was an actual controversy of threatened infringement. Qualcomm moved to dismiss Interdigital’s claims on the grounds that it was premature. Prior to the hearing on these motions, Interdigital conducted discovery from Qualcomm. That discovery showed that Qualcomm had constructed prototype phones, had entered into license agreements with other companies to produce the prototypes, and had five identifiable products in active development.
The court decided that declaratory judgment jurisdiction existed for Qualcomm. Qualcomm had made meaningful preparations to produce specific, allegedly infringing, cellular telephones. Qualcomm’s argument that the telephones were still under development and might undergo changes in the future was not found to be a sufficient reason to dismiss the lawsuit in view of the substantial marketing and development that Qualcomm had already undertaken. As noted by the court, manufacturers constantly make changes to existing products, but not all changes are material for patent purposes.
Qualcomm vs Nokia
Oct 2005 - Nokia and five other firms file complaints with the European Commission alleging anti-competitive conduct by Qualcomm, including high royalty rates.
October 2007 - the EU opens antitrust proceedings in the case.
23rd October 2006 Nokia will have another chance to stop a lawsuit brought by chip maker Qualcomm in the latest twist in a long-running patent battle between the companies. A US appeals court has ordered a reconsideration of an earlier decision in Qualcomm's favour.
Nov 2005 - QUALCOMM’s lawsuit includes patents that are essential for the manufacture or use of equipment that complies with the GSM, GPRS and EDGE cellular standards (the GSM family of standards) and other patents that are infringed by Nokia’s products.
May 2006 - Qualcomm files a lawsuit against Nokia in Britain over two GSM-related patents. Ruling is expected this quarter, Delaware agreement does not apply.
June 2006 -- Qualcomm files a complaint against Nokia with the ITC regarding GSM patents , seeking a bar on imports of Nokia GSM handsets into the United States. In December 2007 administrative law judge determines Nokia had not infringed patents. Final decision expected by April 14.
Aug 2006 -- Qualcomm files a patent infringement lawsuit against Nokia in Germany . The case is on hold.
Aug 2006 -- Nokia files the case in Delaware saying Qualcomm had breached its contract to license patents essential to GSM and UMTS technology standards on fair and reasonable terms. Nokia also asks the Court to affirm that Qualcomm is not entitled to injunctive relief in relation to patents declared essential to a technology standard.
Oct 2006 -- Qualcomm files infringement lawsuits against Nokia in France and Italy regarding GSM technologies.
Feb, 2007 -- Qualcomm files three complaints in China regarding GSM patents .
March, 2007 -- Nokia files complaints against Qualcomm patents in Germany and the Netherlands. Both courts dropped the cases last year.
April 2007 -- Qualcomm files two cases against Nokia in the United States over Nokia GSM cellular phones. Nokia files a counter-suit in Wisconsin in May and in Texas in June.
April 2007 -- Qualcomm asks American Arbitration Association to rule that Nokia's use of its patents after April 9 would mean Nokia extended a key cross-license agreement at old royalty rates. The arbitration will be terminated by end of February, according to Delaware agreement, and the topics will be put on the agenda of the Delaware case.
April 9, 2007 -- The cross-license agreement expires in part. The firms say they continued to negotiate on a new deal.
May 2007 -- Nokia says it filed in a Wisconsin court its first counter-suit against Qualcomm relating to six Nokia implementation patents. The case is on hold.
June 2007 -- Nokia filed a similar case in Texas.
Aug 2007 -- Nokia asks the ITC to bar the import of some Qualcomm chips, and phones using those chips, to the United States as they infringe five Nokia patents. The case was terminated in Nov 2007.
Feb 2008 -- The two companies agree to hold fire in patent cases until first rulings from Delaware.
July 21, 2008 -- The Delaware trial's tentative start date
July 21, 2008 -- Determine whether Qualcomm's charges of royalties for CDMA are too high. While the trial won't likely settle the dispute the two have over a patent agreement that expired in April 2007 pertaining to royalties Qualcomm charges for WCDMA chips
In USA Newman
In July 2001, Qualcomm and Nokia entered into a “Subscriber Unit and Infrastructure Equipment License Agreement” (the “2001 Agreement”) whereby Qualcomm granted Nokia a non-exclusive license to some of Qualcomm’s patents, permitting Nokia to make and sell products that incorporate CDMA technology.
On November 4, 2005, Qualcomm sued Nokia for patent infringement in the United States District Court for the Southern District of California, asserting in its Complaint that Nokia infringed twelve of Qualcomm’s patents.
Nokia’s license defense, in which it sought a declaration that it had a valid and enforceable license to make, import, use, sell, offer to sell, lease, or otherwise dispose of products that incorporate CDMA technology and that Qualcomm’s claims of infringement against those products should be barred by the 2001 Agreement
Decision In this case, the Court considered whether the district court properly determined that it was “not satisfied” that the issue is referable to arbitration.
Qualcomm vs Ericsson
Initiated in September of 1996 with a suit brought against Qualcomm by Ericsson in Marshall, Texas alleging Qualcomm’s CDMA products infringed patents owned by Ericsson
Ericsson had several patents onTDMA (GSM)
December of 1996 Ericsson also filed suit against Qualcomm’s subsidiary Qualcomm Personal Electronics with similar CDMA patent infringement charges.
Qualcomm vs Ericsson
Qualcomm followed in December of 1996 with a countersuit that alleged breach of a 1989 nondisclosure agreement and sought declaration of noninfringement and invalidity.
March of 1997 when Qualcomm filed suit against Ericsson for infringement of seven patents following statements made by Ericsson that it intended to market its CDMA handsets in the U.S.
June of 1997 Ericsson agreed that for a period of seven months it would not manufacture or sell any CDMA subscriber products in the U.S.
Qualcomm vs Ericsson
This effectively gave Qualcomm assurance that Ericsson would not enter the U.S. CDMA market, a position that Qualcomm quickly extended overseas.
July of 1998 Ericsson continued its litigation tactics by filing yet another patent infringement suit against Qualcomm Personal Electronics
October of 1998 Ericsson dismissed all of its claims under three of the patents at issue (U.S. 5,148,485, 5,239,557, and 5,327,577), and at the same time received word from the USPTO that two of its “soft handoff ”
Qualcomm vs Ericsson
Qualcomm was able to get the European Telecommunications Standards Institute (ETSI) Qualcomm ultimately told the International Telecommunications Union (ITU) it would withhold licensing of its intellectual property rights (IPRs) to CDMA technology unless its technology was incorporated into the 3G standards.
On March 24, 1999 Ericsson settled the litigation with Qualcomm and agreed to purchase Qualcomm’s troubled infrastructure businesses.
Qualcomm will also receive rights to sublicense certain Ericsson patents to Qualcomm’s Application Specific Integrated Circuits (ASIC) customers. Finally, both Ericsson and Qualcomm agreed to support the approval by U.S. and international standards bodies of a single CDMA 3G standard.
Qualcomm vs Ericsson
European cellular standard. Industry analysts identified this case as pivotal in determining the direction of digital communications into the 21st century.
Important Claims of Key Qualcomm Patent Upheld in Korea (Motorola)
January 20, 2000
The patent agency of Korea, has upheld the validity of 46 of 49 claims of Qualcomm's Korean Patent No. 134390.
The KIPO rejected nearly the entirety of Motorola's challenge, confirming the validity of the 46 claims in the face of more than 15 new references cited by Motorola as alleged prior art. Claims of this patent that were confirmed are essential to both Second (2G) and Third Generation (3G ) CDMA wireless telecommunications standards, covering critical specifications of such standards.
Patent entitled " System and method for generating signal waveforms in a CDMA cellular telephone system," describes inventions for generating the basic CDMA waveforms used in CDMA wireless systems such as IS-95 and the systems proposed for 3G standards . The inventions of the patent enable multiple callers in a CDMA wireless telecommunications network to efficiently use the same frequency band without mutual interference, allowing for greater system capacity and better link performance.
The disposition of this Korean patent does not have any effect on patents for this invention issued or pending in the United States or in any other country. In fact, the validity of all 49 claims of the United States counterpart to this patent, U.S. Patent 5,103,459, was affirmed last year by the United States Patent and Trademark Office
Qualcomm's pioneering efforts in the development of CDMA cellular technology have yielded more than 300 issued United States patents relating to CDMA and hundreds of issued and pending CDMA patent applications around the world.
Qualcomm vs Motorola US
Sept 6, 1999
QUALCOMM Incorporated Monday announced a significant victory in its ongoing litigation against Motorola.
Q phone does not infringe because it does not have the appearance features that differentiate the Motorola patents, numbers D359,734 and D369,598
The Court's decision confirms that the Q phone is an original design and, as we have contended since the outset of this litigation, establishes that Motorola does not own the exclusive rights to the clamshell form for wireless phones,"
QUALCOMM also announced Monday that it expanded the new case to include claims for patent infringement by Motorola's Code Division Multiple Access (CDMA) phones, including the StarTAC and other models. QUALCOMM's amended complaint, filed on August 5, 1999, states that Motorola's phones infringe three QUALCOMM patents not licensed under the 1990 agreement because they were applied for after the invention period covered by the agreement. QUALCOMM seeks damages and an injunction against Motorola's continued infringement.
Is the first CDMA-based digital cellular standard pioneered by Qualcomm. The brand name for IS-95 is cdmaOne . IS-95 is also known as TIA-EIA-95.
The IS-95 standards describe an air interface , a set of protocols used between mobile units and the network.
It is a 2G Mobile Telecommunications Standard that uses CDMA, a multiple access scheme for digital radio, to send voice, data and signaling data (such as a dialed telephone number) between mobile telephones and cell sites.
Qualcomm Patents Upheld in Europe
February 20, 2002
Qualcomm's European Patent Number 500,689, entitled "Method and Apparatus for Controlling Transmission Power in a CDMA Cellular Mobile Telephone System," covers an invention that is essential to the current commercial CDMA standards as well as third-generation (3G ) standards. The invention provides a technique for controlling the power of signals transmitted by cell phones that enables efficient power allocation in a cellular system. Opposition proceedings were initiated in the European Patent Office (EPO) against the patent in December 1998. During a hearing on January 29, 2002, the EPO upheld the validity of Qualcomm's patent, ruling that amended claims of the patent are valid and rejecting the challenges by the opponents.
EP 500689 Cell phone Cell site
Qualcomm Patents Upheld in Japan
Japan, the Japanese Patent Office has upheld Japanese Patent Number 2,938,573 entitled "Demodulation Element Assignment in a System Capable of Receiving Multiple Signals," in a slightly amended form. The patent covers methods of handling multiple signals at a receiver and is useful in both CDMA and other, non-CDMA communication systems. Opposition proceedings were initiated against the patent in February 2000. During the opposition procedure Qualcomm submitted a request for correction of the patent in order to clarify the scope of protection afforded by the patent. The Japanese Patent Office request has now issued a decision to accept the correction and uphold the patent in amended form, thus rejecting the opposition.