Patent holders agree on W-CDMA royalties

Patent holders agree on W-CDMA royalties
LONDON — A deal among four of the leading owners of patents for W-CDMA technologies could solve the long running dispute over royalties for handsets and infrastructure equipment based on the 3G mobile air-interface technology.

NTT Docomo, Ericsson, Nokia and Siemens today (Nov. 6) reached a mutual understanding to introduce licensing arrangements whereby essential patents for W-CDMA are licensed at rates that are proportional to the number of those patents owned by each company. The intention is to set a benchmark for W-CDMA technology patent holders to achieve fair and reasonable royalty rates.

The four together own the majority of the essential intellectual property rights relevant to the W-CDMA standard that's already been selected by about 110 operators worldwide. This arrangement would enable the cumulative royalty rate for W-CDMA to be at a modest single-digit level.

Earlier this year, JT Berquist, senior vice president at Nokia Networks, said it was vital for the sustained growth of the mobile industry that the cumulative royalty costs of W-CDMA be pegged at a maximum of 5 percent (see May 9, 2002 story).

The same companies also own a significant number of the essential patents applicable to the cdma2000 standard. These patents will be licensed at fair and reasonable terms.

Some other key patent holders, such as Fujitsu, Matsushita Communication Industrial (Panasonic), Mitsubishi Electric, NEC and Sony, also said they are willing to cooperate with the IP rights initiative. Other companies are being urged to join and back the move.

Yrjo Neuvo, executive vice president of Nokia, said: "This initiative means that cumulative royalty rates of W-CDMA are kept at a healthy level. For example, according to the recent developments in China the cumulative royalty rate seems to remain even under our earlier targeted cumulative 5 percent level. This makes the W-CDMA standard safe to invest in for operators, manufacturers and application developers."

Torbjorn Nilsson, senior vice president, marketing and strategic business development at Ericsson, said: "With this initiative we believe the cumulative royalty will be even lower for W-CDMA than GSM, which has enjoyed unrivaled success compared to any other standard in the world."

"This initiative is meaningful for promoting the W-CDMA services by keeping cumulative royalty rate below 5 percent," said Kota Kinoshita, executive vice president of NTT Docomo. "We have discussed through the 3G Patent Platform Partnership [3G3P] how to license essential patents at acceptable royalty rates. We believe the intent of the arrangement is well harmonized with that of 3G3P."

The W-CDMA standard is developed by the 3rd Generation Partnership Project (3GPP). In the 3GPP standardization process the declaration of essential IP rights is mandatory. The European Telecommunications Standards Institute (ETSI) and the Association of Radio Industries and Businesses (ARIB) in Japan maintains an updated list of IP rights declarations for 3GPP.