July 31, 2008
SAN DIEGO—The surprise deal between Qualcomm and Nokia to settle lawsuits over patents and royalties may auger a new era of competitive congeniality in the wireless industry, Qualcomm CEO Paul Jacobs said in an interview.
Jacobs said the two companies have been talking continuously, trying to reach an accord, but the ultimate settlement was pushed along because of a pending trial in Delaware. The settlement was reached July 23 even as the judge in the Delaware case urged the lawyers on both sides not to let the company executives leave until a deal was sealed.
The agreement covers various technology licenses and royalties for a host of wireless technologies, including 2G, 3G and 4G. Nokia also agreed to withdraw as a complainant in an antitrust case before the European Commission. Five other companies are still involved in that complaint—Broadcom, Ericsson, Matsushita Electric Industrial, NEC and Texas Instruments.
Jacobs said he hopes Qualcomm can “build off the positive momentum” of the Nokia agreement and resolve that case, as well as a separate suit involving just Broadcom.
“It’s better to license than to litigate,” Jacobs said on the sidelines Wednesday at the Qualcomm Smart Services Leadership Summit. “We’re not going to back down when we’re right, but the history of this company has been licensing. We’ve not been a litigious company.”
Jacobs also said some Qualcomm executives, including President Steve Altman, worked 40 hours without sleep putting the final Nokia deal together. Jacobs himself spent time on the phone with Nokia President and CEO Olli-Pekka Kallasvuo. The pressure was on because of the pending Delaware trial, he said, and not because of a coincidental court decision in Germany that went against Qualcomm in a Nokia suit over a GSM patent.
Jacobs didn’t go into detail on the new royalty structure to which Nokia agreed, but analysts have speculated Nokia will pay Qualcomm about $1 billion in past royalties and that royalties the Finnish company will pay in 2009 will add about 30-cents per share to Qualcomm’s earnings.
The CEO also said he thinks the agreement could spell smoother sailing ahead for the wireless industry because companies will ask themselves, “Should we spend time on conflict or should we spend our time on realizing the vision of what a mobile device can be?”
Jacobs added that the next few years will show whether or not that willingness to work together will be realized. “The time ahead will be very interesting and we’re in good position to work with all these companies to achieve their business models,” he said.
Portions of the summit discussed wireless data and the health-care industry. Qualcomm has been working on a health-care MVNO for some time, named LifeComm. Jacobs said in the interview he was confident LifeComm would become a reality. He said LifeComm had been delayed mostly because Qualcomm did not want to be the main investor in the MVNO and thereby a competitor with the carriers. But he said the ownership structure has been settled and “I’m confident it’s going to happen.”
