Nokia, Texas Instruments and other leading makers of mobile phones and the chips that power them have formally complained to Brussels that Qualcomm, the US mobile chipmaker, has unfairly used its patents on 3G technologies to squeeze excessive royalties and licensing deals out of the industry.
US chipmakers Broadcom and Texas Instruments, and Ericsson, NEC, Nokia, Panasonic Mobile Communications have each filed complaints to the European Commission requesting it investigate Qualcomm and take action to stop its alleged anti-competitive conduct.
Qualcomm holds patents on Code Division Multiple Access (CDMA) technology that have generated billions of dollars in royalties. It is seeing worldwide adoption of its own next-generation CDMA2000 technology and the WCDMA standard it played a large part in creating. It earns royalties from both.
In a statement, the companies said Qualcomm had refused to license patents to chipset competitors on “fair, reasonable and non-discriminatory terms” while “offering lower royalty rates to handset customers who buy chipsets exclusively from Qualcomm”.
They also said Qualcomm’s royalties on WCDMA were “excessive and disproportionate”, given that Qualcomm charged the same rate for CDMA 2000, despite less of its technology being used in WCDMA.
“Major telecommunications equipment companies on three continents are standing up and saying that Qualcomm’s business practices are unfair, uncompetitive and ultimately illegal,” said David Dull, general counsel at Broadcom.
Analysts said the unexpected coalition exposed the sector’s fears that Qualcomm could take the lion’s share of the spoils from the development of next-generation technologies.
Maurits Dolmans, partner at Cleary Gottlieb, the law firm representing Nokia, said Qualcomm’s practices were keeping the costs of 3G technology prohibitively high, and were ultimately hurting consumers purchasing next-generation handsets.
“The amounts are very significant – possibly in the billions of dollars,” he said.
Broadcom has already made a separate complaint in the US legal system, but has gathered a wider coalition to take the issue to the European Commission, Europe’s leading antitrust authority.
The company said on Friday: “Qualcomm cannot comment at this time.”
The Commission invariably takes months to scrutinise the legal arguments and facts of a case after receiving a complaint.