How low did Qualcomm go on the royalty front?

Nokia and Qualcomm have now settled their nasty patent disputes that spanned three years across the U.S., Europe and Asia. What was primarily at issue was the renegotiation of a patent agreement that expired in April 2007 between the two, which licensed WCDMA to Nokia and GSM to Qualcomm. Under that deal, Nokia reportedly paid a 3 percent royalty rate, and wanted to pay much less. Qualcomm, which derives about two-thirds of its revenues from royalties, wanted to the same rate. And the two were miles apart on the issue.

So the question is, how low did Qualcomm go? Unfortunately we'll likely never be privy to the financial details involved, but it appears the company did perhaps go significantly lower given the concessions involved with the deal. Mainly, in exchange for Qualcomm licensing a number of technologies to Nokia, ranging from GSM to LTE, Nokia has agreed to assign ownership of a number of patents to Qualcomm, including patents declared as essential to WCDMA, GSM and OFDMA. Moreover, Nokia has agreed not to use any of its patents directly against Qualcomm, enabling Qualcomm to integrate Nokia's technology into Qualcomm's chipsets.

Qualcomm is also likely taking into account future business it can score with Nokia, which has historically built its own CDMA chips to avoid any reliance on Qualcomm. I wouldn't be surprised if we saw some technology development deals between the two come to fruition in the coming months.--Lynnette

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