Qualcomm new patent licensing model designed to win clients and regulators

In a significant shift in its patent licensing strategy Qualcomm’s licensing chief stated its new licensing model is aimed at winning customers and easing regulatory concerns.

In a strategic change of tactics, Qualcomm Inc’s patent licensing chief stated, the company has broadened its licensing model in order to lower licensing costs for the next generation of mobile data networks.

The move could significantly ease contentious issues with at least two customers, including Apple Inc.

Although traditionally, Qualcomm’s patent licensing business has been the engine for much of its growth, it has however spurred conflict with companies, including Samsung Electronics, Apple and Huawei Technologies, and regulators in South Korea, China and the U.S.

“It’s a good context for dealing with the two licensee issues we have now,” said Alex Rogers, head of Qualcomm’s licensing division.

Significantly, Rogers did not comment directly on the likelihood of the new patent licensing model resolving existing issues with Apple or Samsung.

Mobile phone handset makers have two options: they could either get a license from Qualcomm for the full suite, which costs around 5% of the cost of the handset, or a smaller “standard essential patents” for 3.25% which only covers the patents required for the handset to work on mobile data networks.

In order to handle the overheads related to lawsuits, the bulk of Qualcomm’s customers license both sets of patents. After a spate of issues with regulators and clients across countries, Qualcomm has eased the licensing model by adding patents to the smaller option, which lowers the cost of standard patents, and it has also added the next generation 5G wireless network to the suite at no additional cost.

This strategic move essentially extends a 2015 settlement with China’s chief antitrust regulator.

“We have not lowered the rate. What we’re doing is including more technology, more (intellectual property) in the offering without increasing the price,” clarified Rogers.

Further, Qualcomm also stated it would only assess its patent fees against only the first $400 of a phone’s net selling price; the previous price cap being $500.

“What we’re doing here is creating a foundation for stability going forward,” stated Rogers, and described the 5G licensing moves as being “regulator friendly”.

Qualcomm’s new licensing model could push more handset makers to opt for its lower-cost standard patents rather than its pricier full portfolio.

“What we perceive here is there will be more of a mix than there was in the past of companies opting for (standard essential patents) only,” said Rogers. “How much more, depends on each individual company.”

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