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Patent war looms as China concludes Q'comm antitrust probe

Posted: 08 Dec 2014     Print Version  Bookmark and Share

Keywords:reverse patent licence  smartphone  patent 

The National Development and Reform Commission has completed its antitrust investigation into U.S. chipmaker Qualcomm, Yahoo News echoed a report by Chinese newspaper First Financial Daily, which cited an anonymous source who was familiar to the matter.

According to the source, the Chinese regulator will order Qualcomm to scrap its so-called "reverse patent licence," an agreement that the U.S. tech giant imposed on its client that allowed them to drop patent fees to each other.

In addition, Qualcomm will have to pay a huge fine and lower their licensing fees.

The monopolistic agreement forces smartphone manufacturers that use Qualcomm's chips to "authorise their patent rights" to the said company. Apart from this, they are barred from collecting any patent royalties from other Qualcomm clients. The practice, the report stated, should be seen as an unfair scheme.

Many Chinese mobile phone manufacturers (ZTE, Huawei, Oppo, etc.) and equipment vendors will benefit from the decision should it be confirmed as true since these local companies have a great deal of smartphone-related patents in the country.

ZTE, for example, had more than 52,000 patents worldwide in 2013. Huawei had 30,000 patents as of November this year. On the other hand, other smaller Chinese smartphone makers like Xiaomi and Oppo on have very few patents. The former has 10 while the latter has 103, Yahoo News quoted First Financial Daily.

Makers of low-cost smartphones will suffer from patent-related costs if they do not get a suitable patent library.

Comments made by ZTE and Huawei regarding the issue were open for questioning. According to the report, sources related to ZTE said that the company approves of the decision and that it should receive more patent dividends. Huawei, for its part, said it would not take the matter to the courts.

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