Qualcomm, Nokia Gird for Clash of the Titans - InformationWeek

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Commentary
4/6/2007
03:03 PM
Eric Ogren
Eric Ogren
Commentary
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Qualcomm, Nokia Gird for Clash of the Titans

Next Monday's expiration of the cross-licensing agreement between Qualcomm and Nokia has sparked a number of different legal tactics by both companies over the the last few weeks. What's really at stake here? Money and Power.

Next Monday's expiration of the cross-licensing agreement between Qualcomm and Nokia has sparked a number of different legal tactics by both companies over the the last few weeks. What's really at stake here? Money and Power.There's no other way to say it. Both Qualcomm and Nokia are international wireless technology powerhouses. Between the two organizations, the number of patents regarding cell phone technology that people use every day is immense. The very future of mobile technology, and its cost, will in large part be determined by the outcome of the negotiations.

Qualcomm and Nokia first signed the current licensing agreement back in the early 90s, and re-vamped it in 2001. The agreement allows each company to use portions of the other's existing technology in their own products for certain licensing fees. For example, Nokia pays Qualcomm between 4% and 5% of the cost of each handset it sells that uses CDMA technology. Cross-licensing agreements like this are nothing new. Companies do it all the time. Why is the fuss surrounding this one creating so many waves? Well, billions of dollars.

Analysts estimate that Nokia already pays Qualcomm $500 million per year to license its patents. I can't think of anyone who wouldn't want to keep getting half-billion dollar checks in the mail. On the flip side, I can't imagine Nokia enjoys writing out those checks, either.

Whatever the details are of any future agreements, you can be sure that we'll all feel the reverberations. How soon that will be, however, depends on how reasonable both companies are during the negotiation process.

Considering the legal maneuvering we've already seen, and the threat of new legal action after the agreement ends from both firms, I am not overly hopeful for a speedy resolution.

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