Thursday, July 23, 2009

Qualcomm Fined $208 Million

According to the Korea Times, the Korea Fair Trade Commission, this nation's anti-trust watchdog, has fined the U.S.-based company Qualcomm a record amount of $208 million for unfair business practices.  The Commisson said that the U.S. chipmaker had used its market dominance to maintain a virtual monopoly on CDMA-based phone chips.  Qualcomm owns critical key patents for CDMA, reaping huge profits from Samsung and LG Electronics.
What the Korea Times article neglects to mention is that Korea, back in the 1990s became the first nation in the world to commercialize CDMA technology.  This was accomplished through a partnership of Qualcomm and Korea's Electronics and Telecommunications Research Institute (ETRI).  As a result of the successful commercialization of CDMA in Korea, and its adoption by mobile service providers in the U.S. and other parts of the world, Korea's electronics companies began benefitting hugely from the export of CDMA handsets and mobile base stations.  As mobile telephony worldwide is transformed into mobile computing and internet access via the iPhone, Android phones and competitors, the latest versions of CDMA are likely to be even more important.  There is much more to say on this topic, but I'll conclude for now with one comment.  A lot of money is at stake here.    How much is Qualcomm entitled to and for how long for its intellectual property?  Comments are welcome.

1 comment:

  1. Before the ink was dry on the contract, the Korean press began huffing and puffing about the "unfairness" of the royalty contract Korean phone makers signed with QUALCOMM. Unfair means that it doesn't solely benefit Korean companies - the American company QUALCOMM benefits as well. (I won't get into the underlying Confucian reasons for why that would be the expectation.)

    Needless to say, without initial support from QUALCOMM, Korea would not be the hotbed of mobile technology it is today.

    (Disclaimer: My firm worked for QUALCOMM several years before I joined, but we no longer do and my interest is purely personal, not professional.)