The Chinese National Development and Reform Commission has been conducting an antitrust investigation of Qualcomm’s activities in the country for quite a while, and now we get an idea of what the outcome of that will be. Short version: not good for Qualcomm.
The mobile chip maker will have to pay “huge fines” for “monopolistic” behavior, but that’s not all. It will also be forced to lower its licensing fees in China, as well as give up on its “reverse patent license”.
This is a compulsory agreement that Qualcomm forces its customers to sign. It essentially states that any device makers who use Qualcomm chips aren’t allowed to collect any “relevant patent royalties” from other Qualcomm clients. The customers must also “authorise their patent rights to Qualcomm” under this scheme.
The Chinese commission feels that this practice has unfairly protected those mobile device makers who have fewer patents from those who hold more of them. Without this type of agreement, smaller handset manufacturers might be sued by bigger ones, and this will cost them dearly. Hence, they may make their wares more expensive in order to account for the patent fees.
The decision seems to be of a clear benefit to ZTE and Huawei, which are probably the leaders when it comes to mobile patents held by Chinese companies. ZTE has 52,000 patents worldwide, while Huawei boasts some 30,000. Though while ZTE has hinted that it can’t wait to make some money off of its patents in its home market, Huawei has apparently committed to not head to the courts on this issue.