EU Targets Qualcomm in Antitrust Investigation

Maintaining its place at the forefront of high-profile patent and licensing disputes, mobile phone chipmaker Qualcomm today became the subject of a formal antitrust investigation by the European Commission.

Rival mobile technology companies — Ericsson, Nokia, Texas Instruments, Broadcom, NEC and Panasonic — have been complaining to the EC since 2005 that Qualcomm abused its market position under Europe’s competition rules. Specifically, they charge that Qualcomm licensed a technology critical to Europe’s third-generation mobile standard (known as WCDMA) under terms that were not fair, reasonable or non-discriminatory, according to the EC.

The EC, the European Union’s executive branch, has not expressed any view on the merits of the complaints, but the commission said in a statement that its investigation will focus on Qualcomm’s licensing terms and conditions.

“The economic principle underlying [fair, reasonable and non-discriminatory] commitments is that essential patent holders should not be able to exploit the extra power they have gained as a result of having technology based on their patent incorporated in the standard,” the commission said.

Qualcomm responded later today by charging that its rivals’ complaints are motivated by commercial considerations, and that they are trying to stifle competition from the San Diego-based chipmaker.

However, both Qualcomm and its rivals applauded the EC’s decision to formally initiate the case.

“We are pleased that the commission has decided to give the case priority status to move it forward swiftly to resolution,” said Qualcomm President Steve Altman in a statement. “Furthermore, we will continue to explain the undisputed fact that Qualcomm greatly contributed to the development and commercialization of WCDMA technology and has abided by its obligations to [European Telecommunications Standards Institute, or ETSI] and other standards-setting organizations.”

ETSI is the EU’s chief standards body for the telecom arena, which also oversees licensing for technology essential to the region’s mobile phone standards.

The rival companies allege not only that Qualcomm charged disproportionate and discriminatory royalties for its WCDMA-related technology, but that it tried to exclude competitors from the market and prevent others from entering it, according to a statement released today by Nokia.

“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 technology and handsets,” Nokia said.

Qualcomm and Nokia have a tangled history of patent-related battles, with each having accused the other of infringing on its technology. Mostly recently, Nokia asked the U.S. International Trade Commission to ban products that contain Qualcomm chips. Separately, Qualcomm is appealing a recent ITC patent-related remedy that stems from a complaint brought by Broadcom.

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