You are here

Qualcomm wants to quote its foe Samsung as it defends licensing

Wednesday, February 10, 2016 - 09:07

[SAN FRANCISCO] Qualcomm Inc is asking a US judge to let it use Samsung Electronics Co's words against it in a South Korea licensing fee fight.

The chipmaker wants to counter Samsung's complaints about its patent licensing practices to a South Korean regulator by showing that the handset manufacturer has defended identical conduct in multiple legal battles. Qualcomm on Tuesday asked a federal magistrate judge in San Jose, California, to order Samsung to turn over information it called essential to its defence before South Korea's Fair Trade Commission.

Qualcomm gets the majority of its profit from licensing patents that cover some of the fundamental technology of modern phone networks. The chipmaker has faced regulatory challenges across the globe and earlier this year paid a fine and agreed to charge a smaller percentage on locally sold handsets in China. The company also is the subject of regulatory investigations in the US and Europe.

Information from prior matters will show that Samsung "is taking inconsistent positions" depending on whether it is the licensor of standard-essential patents or the licensee, according to a January filing in the San Jose court by Qualcomm.

The San Diego-based chipmaker said it needs a US court order for access to documents because there are no procedures under South Korean law to compel Samsung to turn over the information it seeks.

Qualcomm is also trying to obtain records from MediaTek USA Inc, Intel Corp, Apple Inc and Texas Instruments Inc, all of which have opposed the company's requests.

Without the information the chipmaker now seeks through subpoenas, the Korean agency is "operating at the same information deficit that we are," Qualcomm lawyer Gary Bornstein argued at a hearing Tuesday.

US Magistrate Judge Paul Grewal expressed concern about interfering in the investigation of a foreign investigatory body. Mr Bornstein said an examiner for the Korean fair trade commission has asked the court to refuse the company's request. The judge said he'd issue a ruling soon.

At the heart of the dispute is an attempt to rein in Qualcomm's dominance of the mobile phone chip business and devalue its intellectual property which it has successfully asserted as being fundamental to all modern phone networks.

In fiscal 2015 Qualcomm got US$7.95 billion in technology licensing revenue. It turned that into US$6.88 billion of pretax profit.

Qualcomm's licensing revenue is crucial to funding its industry-leading research and design efforts. Rivals such as Intel Corp, which has failed to make a dent in Qualcomm's dominance, may see themselves benefiting from cutting into its spending on improving products.

For handset makers such as Apple Inc and Samsung - which also competes with Qualcomm in chips - reducing the basis for Qualcomm's license revenue calculation would help improve their profitability. Handset makers pay Qualcomm licensing whether they use its chips or not.

South Korea is home to Samsung and LG Electronics Inc, among the world's biggest phone makers and two of Qualcomm's top three customers.

Qualcomm charges fees based on the selling price of handsets, which South Korea is now challenging. The commission argues that the fee should be based on the price of the semiconductor component that uses the technology.

BLOOMBERG

Powered by GET.comGetCom