Paul Jacobs negotiates way out of EU complaint

The European Commission today announced that it’s dropping the four-year-old antitrust case against Qualcomm‘s patent licensing policies. Don Rosenberg — general counsel of Qualcomm since October 2007 — was understandably pleased:

Qualcomm is extremely pleased to learn of the European Commission's announcement. After an extensive four-year investigation into Qualcomm's practices, and despite the coordinated nature of the complaints made against it, the Commission has terminated its investigation with no finding of a violation

The Case

The complaint was filed in October 2005 by two European telecom makers (Nokia, Ericsson), two Japanese makers (NEC, Panasonic) and two US competitors for Qualcomm’s chipsets (Broadcom, TI), sending Qualcomm’s shares down 4.6%.

Since that time, Qualcomm settled with two of the original complainants. Its biggest customer — Nokia — renewed its license to Qualcomm’s patents in July 2005 on terms believed to reduce its long-term royalty payments. After losing repeated lawsuits with Broadcom, last April Qualcomn settled all IP complaints between the two companies. Both parties dropped out of litigation against Qualcomm.

In anticipation of the commission’s decision, Ericsson on Tuesday dropped its complaint to the EC. (Note: this is Ericsson the leading supplier of cellular infrastructure, not Sony Ericsson, the handset also-ran). Ericsson claimed victory in its attacks on Qualcomm’s business model due to a $208m fine in Korea and an ongoing investigation in Japan.

Since 2005, TI and Qualcomm have avoided litigation, but in 2007 Qualcomm passed TI to be the top mobile handset chipmaker. Qualcomm is on track to be the 6th largest semiconductor vendor (albeit a fabless one) this year.

The official EC statement said

The Commission committed time and resources to this investigation in order to assess a complex body of evidence, but has not as yet reached formal conclusions.

All complainants have now withdrawn or indicated their intention to withdraw their complaints, and the Commission has therefore to decide where best to focus its resources and priorities. In view of this, the Commission does not consider it appropriate to invest further resources in this case.

The Commissioner

One possible factor in the decision may have been the expected end of the term of the EC’s Competition Commissioner, Neelie Kroes, who saw her role as remaking the global world order for the benefit of EU firms.

Kroes has openly campaigned for more aggressive oversight against US market leaders (Microsoft, Intel, Qualcomm). She unilaterally imposed a $1.4b fine on Intel for its actions against its US competitor. She hoped to use her success over Microsoft to bring down Qualcomm as well.

Two months ago rumors surfaced that Kroes wanted to convene a special panel to examine Qualcomm’s activities. At the time, some speculated that others within the EC opposed Kroes because there wasn’t much of a case. Tuesday, Kroes won reappointment to the European Commission, but is widely expected to be rotated out of the powerful Competition position.

The CEO

I believe that clearing up the uncertainty and risk associated with these various legal threats constitutes Paul Jacobs’ greatest accomplishment thus far as Qualcomm CEO. It’s tough to follow an industry legend — the only CEO the company had ever known — who also happens to be your father. (Note: for my book, I’ve interviewed Irwin Jacobs twice but have only heard Paul Jacobs give speeches.)

However, Paul Jacobs inherited these problems, the inevitable collision between Qualcomm’s take-no-prisoners royalty model and the decision of its GSM rivals to use CDMA technology in their 3G standard.

When Qualcomm (charitably) had mixed results in the courtroom, its new CEO took a more conciliatory approach with its most determined opponents (Broadcom and Nokia) to create a win-win outcome. (I’m betting Qualcomm also worked out less public accommodations with its other adversaries). The resolution of these cases brought the end to the EU case, the most serious threat to its business model.

When he ascended to the CEO position in July 2005, Jacobs was best known as a technology enthusiast who emphasized new revenue streams such as MediaFLO. The jury is still out on these businesses, but given his pragmatic approach towards litigation, one can hope he will take a dispassionate look at them and decide to pull the plug if they’re not panning out.

Latest Broadcom/Qualcomm Skirmish

This morning, the IP SIG of the telecom council had one of its occasional meetings to review major developments in IP law. IP is obviously very important to the local industry, whether it be Qualcomm’s patent licensing business model or Ron Katznelson’s current efforts to promote patent reform.

I couldn’t make the IP SIG, but on the agenda were three cases. One case was Broadcom v. Qualcomm. Which one? you ask — after all, there are so many. In this case, the lawyers talked about the case that brought findings of legal misconduct and forced Lou Lupin to fall on his sword. Another case scheduled for the IP SIG meeting was the ruling in Quanta v. LG, where the SCOTUS set new standards for doctrine of “patent exhaustion.”

As it turns out, the Quanta ruling plays a prominent role in Broadcom’s latest lawsuit against Qualcomm, filed October 8 in federal court. This filing is just the latest in itsongoing series of litigation intended to force Qualcomm to license its patents on terms that Broadcom finds acceptable: a royalty-free cross license.

When I saw the latest Broadcom v.Qualcomm case, I asked one of San Diego’s leading IP lawyers, USD professor David McGowan, if he would be willing to comment for this blog. I thought of David because he had analyzed the Quanta case for the leading patent blog. I already knew him because we’d met at an open source research conference, and we share a common interest (particularly in IP law) at the intersection of law and economics.

As a special guest commentary, here is Prof. McGowan’s analysis of the original Broadcom complaint. Paragraph numbers refer to the original complaint as filed in the Pacer database system.

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Inexhaustible: The Latest Broadcom / Qualcomm Skirmish
By David McGowan
Lyle L. Jones Professor of Competition and Innovation Law
University of San Diego School of Law

Broadcom recently sued Qualcomm for a declaration that certain of Qualcomm’s alleged licensing practices misuse Qualcomm’s patents. The suit is both predictable and plausible in light of the Supreme Court’s recent Quanta opinion.

Based on Qualcomm’s description of its licensing practices, the district court’s decision will likely turn on how it resolves a question left open in Quanta. From an economic point of view I hope the court reads Quanta narrowly. Such a reading would tend to favor Qualcomm. There is a plausible formal case for Broadcom’s claims, however, so the case must be taken seriously.

The complaint alleges Qualcomm double-dips by charging handset manufacturers a royalty on both chipsets and handsets. Qualcomm may earn chipset royalties through sales to handset manufacturers or from licenses to competing chipset manufacturers such as Broadcom. It also charges a royalty directly on handsets.

Broadcom claims the Quanta case holds that a patentee may not charge downstream royalties beyond the first sale of its technology. This claim implies Qualcomm may either charge handset manufacturers a royalty for the handset or for a chipset (directly from Qualcomm or indirectly from Broadcom) but not both. Broadcom is asking the court to declare that it need not pay royalties to Qualcomm when Broadcom sells chipsets to handset manufacturers who pay Qualcomm royalties on handsets. (¶5)

Broadcom alleges Qualcomm’s double dipping drains from the industry money that could be used to foster innovation and competition. I find this claim implausible. Qualcomm innovates and there is no general reason to favor innovation by Broadcom or handset manufacturers over innovation by Qualcomm. This complaint raises distributional issues, not questions of dynamic efficiency.

Broadcom also alleges Qualcomm’s licenses reduce competition. It offers two theories in support of this claim. The first is that Broadcom must either take Qualcomm licenses or risk infringement action. That theory is doubly flawed. It confuses an effect on a competitor, Broadcom, with an effect on competition generally and it has nothing to do with the double dipping claim, which is the only one to which the Quanta holding might apply. If Broadcom operates under a cloud of infringement that is because Qualcomm has exclusive rights in its inventions not because of its licensing model. Only the serendipitous fact that the licenses were negotiated before Quanta was decided offers Broadcom any maneuvering room here, and that is a legal not an economic point.

The same points hold for the allegation that Qualcomm’s practices deter entry and increase costs. (¶29) That charge would be no different if Qualcomm suppressed all manufacturing other than its own and took all its royalties in chips. It seems to me a charge against the patent system rather than tiered licensing.

The second theory is that Qualcomm licenses favor its products over competitors’ products. Little is said about this claim so it is hard to know what to make of it. At one level it is not clear why Qualcomm would want to do this. Its patents mean it can obtain revenue by royalty from Broadcom or sale to handset manufacturers. Economically it should be indifferent between the two revenues streams. Indeed, if Broadcom is a lower-cost producer than Qualcomm, the latter would maximize profits by charging a high royalty rather than producing itself.

The complaint also refers to Qualcomm using its patents to leverage royalties, and leverage may be what the second theory has in mind. (¶24) It is not clear what Broadcom means by this reference. The facts alleged do not support the typical leverage claim, which is that a firm with market power in one market will use it to extend the duration of power in that market or to extend its power to another market. Rather, this appears to be a case in which single monopoly rent theory has a lot of force.

If handset manufacturers must practice Qualcomm inventions they must deal with Qualcomm, which implies some royalty. It does not imply an infinite royalty, however (Qualcomm wants handset sales so it is in its interest to set a royalty that allows handset manufacturers competitive returns on their investments). Still less does it imply that Qualcomm would earn less charging a single handset royalty than charging a royalty on both handsets and chipsets.

Chipsets and phones are close complements used in a fixed ratio. Basic rational actor assumptions imply Qualcomm will get as much money as it can; they also imply Qualcomm can get that amount at any level of production (either chips or handsets) and cannot get more by charging x at one level and y at another.

Here is a simplified illustration supporting the latter point. Suppose it is the dominant strategy for handset manufacturers to set prices at the average reservation price consumers place on the handset (given the cost of a contract with a carrier). Let’s say the average reservation price is $10, handset manufacturers need to earn $6 per handset, and the only input cost is chipset royalties. In theory QC could charge $4 as a handset royalty or charge $3 for a chipset and $1 as a handset royalty (or $2 and $2, of course). What it could not do is charge $3 for a handset royalty and $2 for a chipset royalty. (There are various qualifications to this logic in the antitrust literature but BC’s complaint does not seem to implicate any of them.)

No doubt this analysis is too crude to capture all the facts of the case. One would need to know the deal structures better than I do to offer more precise analysis. The analysis does raise significant questions, however, which the complaint does not answer.

It is hard to say what is likely to happen. Quanta dealt with an unconditional license and Qualcomm has said its licenses are expressly conditional. The Court did not rule on such licenses. The district court therefore is not bound to rule for Broadcom. If one read the Supreme Court as sending the signal that patentees should only be able to engage in one transaction per product, though, one could extend Quanta to reach the result Broadcom seeks.

As I mentioned I favor the narrow reading. I approach the problem this way. First, as a default matter, do we expect parties or courts reach more socially efficient bargains for the exploitation of inventions? In my view, both economic theory and experience favor parties as the default bargainers. Living markets as they do, they have much better information and much keener incentives to get things right than a generalist judge faced with unfamiliar information spun vigorously by competing advocates.

Second, should courts deviate from that default? The answer may be yes but only if there is a good reason. Absent such a reason the arguments favoring the default rule carry through. In some cases (price fixing for example) there will be an economic reason to abandon the default but there seem to be no such reason here. In other cases precedent might compel a court to abandon a default. Here it does not because the licenses at issue seem to be materially different from those at issue in Quanta. (Nothing in Quanta calls the default itself into question.)

Third, if there is no substantive reason to abandon a sensible default position and precedent does not require abandonment should a court abandon it? To me the question answers itself. Once you get the default right, in my view, you need a reason to move away from it, and there is no such reason here.

InterDigital entering the product business

David Mock — author of The Qualcomm Equation — on Tuesday summarized the stock analyst recommendations on InterDigital Communications. InterDigital is one of the larger WCMDA patent holders — along with Qualcomm one of the few companies whose WCDMA business model is about patent royalties.

The difference is that Qualcomm decided not to spin off the chip-making business (after it settled its last patent dispute with Nokia 5 years ago) and thus it has two major divisions: QTL (technology licensing) and QCT (fabless chips for CDMA, cdma2000 and WCDMA).

I had not realized that IDCC’s business model is based on large one-time settlements. Here’s how Mock explains it:

Revenue. On average, analysts look for InterDigital to report $52 million in revenue this quarter, way below the $297 million last year, but that number was inflated with a one-time gain.

Earnings. The average analyst expectations vary wildly but average out to a $0.01-per-share loss for the quarter. …

Significant one-time settlements have anchored the bulk of InterDigital's past revenue.

What was really really fascinating was the S&P summary of IDCC’s financials:

Margins	12/05	03/06	06/06	09/06	12/06	03/07
Gross	69.7%	73.1%	88.4%	89.2%	89.4%	88.7%
Operating	12.1%	21.9%	66.9%	68.7%	70.0%	68.5%
Net	33.5%	38.2%	53.7%	54.8%	46.9%	46.3%

I do not give stock advice — especially (after riding Iridium all the way down) to myself. So I don’t offer any opinion about the IDCC prospects, only the observation as someone who studies the telecom industry (and mobile phone patents) that the IDCC revenues and profits are among the most variable (some would say erratic) in the industry.

Motley Fool’s readers are very bullish on the stock. But from what I’ve seen, the stock has a cult following like a lot of other thinly traded stocks. IDCC is tiny compared to other 3G telecom suppliers. Qualcomm is #317 on the Fortune 500, with Motorola #61; Samsung is #63, Nokia #135 and Motorola #152 on the Forbes Global 2000).

Now IDCC wants to get into the baseband ASIC business for 2G and 3G phones — making IDCC’s business model an exact copy of Qualcomm’s. (I suppose the Qualcomm loyalists would say “a pale imitation of Qualcomm’s.”) While depressing margins, this should smooth out revenues and give somewhat of an insurance policy against patent problems going forward.

But, as Mock points out, that will put them into direct competition with Qualcomm, TI and Broadcom. Even with foundries, I would imagine such chip design is complex, and its three major rivals have a big headstart. As the newcomer, it will be interesting what sort of competitive advantage IDCC will have to offer.

Technorati Tags: 3G, business models, patents, semiconductors

Qualcomm’s #1 cheerleader

Because of its large patent portfolio and its aggressive assertion of its patent portfolio, Qualcomm has long been a controversial firm in the telecom industry. To some, it’s no better than Rambus. To others, it’s another successful example of an open innovation business model.

Given this controversy, who is Qualcomm’s #1 cheerleader? That is to say, who is the most biased, one-sided, unrealistic in covering Qualcomm — a mouthpiece for Qualcomm’s positions? I write this both as someone who had limited training in journalistic ethics (during my brief stint as a wanna-be and then small-town reporter), as someone who tries to teach business students to do a complete and balanced analysis, and of course as someone who’s been studying Qualcomm for more than a decade.

Let me rule out some possibilities. First, I want to disqualify the CDMA Development Group on a technicality. Just as the Association for Competitive Technology has been decried as a Microsoft front group, the Open Group was an auxiliary to Sun Microsystems, and the USB Implementors Forum is effectively a subsidiary of Intel, so we expect CDG to usually do the bidding of the main firm in the CDMA ecosystem. No surprise or deception there.

Second, I don’t think the Union-Tribune fits either. Bruce Bigelow, Jennifer Davies, then (since early 2004) Kathryn Balint seem to have consistently sought to get both sides of the major Qualcomm stories. Certainly they show less bias than the hometown papers of some of Qualcomm’s enemies in its IPR fights, such as the OC Register (when it covers Broadcom) or some of the European press (covering Nokia, Ericsson or in particular the EU antitrust case). There’s a difference between having easy access to one side and convincing readers that there is only one side to a controversy. (Still, none of these compare to the drumbeat of biased and often inaccurate reports on Qualcomm royalties from the Korea Times.)

Here the nominees are:

• George Gilder, “futurist,” who used his Forbes (telecosm-centric) column of the 1990s to tout Qualcomm’s technology and business prospects, complete with predictions of the triumph of its $500+ million dollar Globalstar investment.
• David Mock, stock analyst, sometimes industry commentator and author of the book The Qualcomm Equation (which has a preface by Gilder).
• Academics-turned consultants Donald L. Martin and Carl De Meyer, authors of the Qualcomm-commissioned economic rebuttal to the Nokia-commissioned paper by professor David J. Goodman and consultant Robert A. Myers.
• Joel West, college professor, author of four teaching cases that present Qualcomm’s IPR-based business model as a model for other companies to follow, as well as a forthcoming book on Qualcomm and the earlier Jacobs-Viterbi company, Linkabit.

Of course, readers of the blog will know who I vote as the least biased. The balloting is rigged, because I declare a unilateral right (on my own blog) to pick my own favorite.

Still, based on my unbiased assessment of bias, the winner (by a landslide) is George Gilder. Not for his seven-month old Forbes column “Qualcomm Still Rules Wireless Roost,” but for his column Friday in the Wall Street Journal.

In his column (registration required), Gilder writes:

The 10-year war mounted by EU bureaucrats and Europe's communications giants against America's leading wireless technology innovator, Qualcomm, is now reaching a climax. …

A decade ago, with its single, unifying cellphone standard known as GSM, Europe led the world in mobile communications. But threatened by Qualcomm's CDMA breakthrough, the Europeans launched a ferocious political and PR offensive, hoping to scare off potential customers of the young American firm. The technology was all hype, they said; it "violated the laws of physics."

When Qualcomm proved them wrong and its mobile technology deployed across the U.S. and Korea, Europe went to plan B. They excluded the Americans from the standards process for third-generation, or 3G, technology, battled in the courts, and mandated their "new" system for all of Europe. But in fact, the new European and Japanese standard, called Wideband CDMA, was essentially a copy of the American CDMA system.

And it goes on from there.

Gilder’s hyperbolic EU-bashing has an element of truth. Certainly, there are elements of European industrial policy that resemble (as always) French industrial policy, the kind that brought us Compagnie des Machines Bull, Alcatel and Sanofi-Aventis. But there are aspects of Qualcomm’s IPR business model that resemble Microsoft or Rambus (as well as less controversial examples like Dolby).

Nokia is offering Qualcomm 20¢ on the dollar because it claims Qualcomm is “unfair,” as do many other companies writing Qualcomm large royalty checks (whether in Europe, Korea, Texas or Irvine). Even if one dismisses Nokia’s claims outright and assumes Qualcomm is blameless on all charges (which seems unrealistic), there would still be an important policy question to be answered: if Rambus is illegal conduct, and Qualcomm is legal, what’s the line in between? IP law here butts up against “unfair competition” of antitrust law.

This is hardly unique to Qualcomm, as (the Mickey Mouse copyright extension act notwithstanding) case law is how the American system typically answers such policy dilemmas. If copying is legal in Sony v. Universal Studios, but illegal and MGM v. Grokster, that leaves a lot of specifics to be resolved in reconciling the protection rights of copyright holders and the fair use rights of buyers.

Technorati Tags: business models, intellectual property, Qualcomm

Qualcomm says “no” to 20 cents on the dollar

Kathryn Balint of the U-T had an interesting day two (three? twenty?) story this morning (C3 in the dead tree edition) on the Nokia-Qualcomm negotiations over W-CDMA patents.

This time last week, reporters breathlessly reported Nokia’s PR that it had “paid” Qualcomm $20 million for rights to use Qualcomm’s patents. When I was a business owner, being “paid” meant that I had money in hand, in my bank account or a check I could cash.

What Balint’s story today makes clear (even if she doesn’t say so directly) is that Nokia made a conditional offer of payment. Not surprisingly, the proposed payment came with a set of legal conditions:

Qualcomm also said it rejected “the accompanying multiple pages of terms upon which Nokia conditioned its payment.” The exact terms proposed by Nokia remain confidential.

Nokia has known about this deadline for more than a year, and is clearly mounting a PR campaign to both lower people’s expectations as to the value of Qualcomm’s portfolio, and insulate itself from the public perception that it’s a wanton patent infringer (like, say, Vonage). Nokia corporate has been issuing an ongoing stream of press releases.

This morning’s release says Qualcomm is a big user of Nokia patents and thus (presumably) should offer Nokia a reduce royalty or royalty-free cross-license. Of course, if Qualcomm got in the habit of doing that, its whole IP business model would be in jeopardy.

Balint had one other tidbit — the $20 million Nokia offered is what is “fair and reasonable” for the entire quarter. If (as reported) Nokia is paying $450-500 million annually in royalties, then this is less than 20¢ on the dollar from the previously agreed-upon terms. No wonder Qualcomm dismissed the offer as unrealistic.

Somewhere (can’t find the link) I saw speculation that Nokia hoped for a 50% royalty reduction (which if granted everywhere would reduce Qualcomm’s annual net income by one-third). If they offered less than 20%, then clearly that was not “fair and reasonable” but a negotiating ploy.

Of course, outsiders have no idea what’s going on behind closed doors, which makes it doubly important to ignore the PR war.

Technorati Tags: 3G, business models, Nokia, patents, Qualcomm

All Quiet on the Western Front

For nearly century (ca. 1840-1920), the dominant form of warfare between major powers was massed armies, supported by artillery. Long-distance barrages of cannon, mortar and artillery would “soften up” the opponent, particularly during the U.S. Civil War and the Western Front during the Great War (the war to end all wars). In such a context, an unexpected nighttime pause in shelling (I’m told) could be an unnerving event — suggesting either the opponent was either reloading for a major barrage, or moving forces forward for a full frontal attack.

Today (Tuesday), the lack of news on the bitter Nokia-Qualcomm IPR fight is eerie. By most calculations, April 9 (yesterday) was the last day that Nokia’s 2001 CDMA patent license with Qualcomm was valid, and thus any Nokia W-CDMA product shipments today would potentially be in violation of Qualcomm’s patents.

The stakes are high. Based on numbers given by Qualcomm CEO Paul Jacobs at the annual meeting, I estimated that the annualized (post-tax) value of Nokia royalties to Qualcomm’s bottom line was $250-400 million/year, consistent with the $450 million to $500 million (pretax) annual top line estimate made by stock analysts. However, since Nokia is still shipping some GSM phones without UMTS, the proportion is only going to increase as UMTS (W-CDMA) becomes dominant in Europe and starts to be deployed in the US.

This is really the second battle of a war that began nearly 10 years ago. In 1998, Qualcomm held the dominant IPR in the 2G IS-95 (later cdmaOne) but essentially none in GSM (from the EU) or IS-54/IS-136 (the Western Hemisphere D-AMPS). The GSM group (led by Nokia and Ericsson) and the Japanese had agreed to combine a GSM network with a Japanese W-CDMA air interface to create a 3G standard before the Americans could get their act together. The hope of the group (by then called 3GPP) was that they would not need a license to Qualcomm’s CDMA technology, or that Qualcomm could be forced to cross-license its patents (and thus cancel out royalties) as the EU manufacturer cartel had done with GSM. (These patents formed an entry barrier well-documented by the research of my colleague Rudi Bekkers.)

The last battle was when Ericsson gambled that it could ship UMTS phones without a Qualcomm license. The IPR fight threatened to become a EU-US trade war, until in March 1999 the two sides announced a deal. Qualcomm dumped its money-losing infrastructure business and got Ericsson to sign a patent license: despite hand-wringing at the time, it was a clear victory for Qualcomm. Ericsson has since closed the CDMA infrastructure division in San Diego (for which it paid a reported $250 million), leaving that market to Lucent and Nortel.

The speculation now is rampant: both sides must dig in, and both sides must settle. The world’s largest cell phone maker has a business model based on selling phones. Thus, they have been pushing for years to change the rules for UMTS royalties in two ways. First, they want value to be determined by their patent counting proposal (rejected by Qualcomm) that argues that Qualcomm’s patent royalties should be proportionate to its share of the UMTS IPR. Second, they want total royalties should be capped at 5% so more buyer money ends up in the hands of cell phone makers. (Nokia claims its total UMTS IPR costs are less than 3%, but — as with all cell phone IPR royalties — the real figures are not public).

The world’s largest cell phone IPR holder has sought to stick to a business model that says “use one patent, use them all, the price is the same” — a price that (with the notable exception of a one-time deal in China) is around 4-5%. If Qualcomm cuts royalties for Nokia, it will have to cut royalties for almost everyone else, and its IPR royalties (1/3 of revenues but 2/3 of profits) will fall across the board. So this is a pile of money to Nokia but Qualcomm’s entire future.

Conversely, both sides have weaknesses. Nokia’s offer of a token $20 million royalty payment has been suggested to be an attempt to avoid treble damages if they lose the patent lawsuit they plan on winning. Meanwhile, this is the first real test of leadership for Jacobs fils, while Jacobs père in his long career has created two companies, fought the long uphill war to establish CDMA, and of course won the aforementioned skirmish with Ericsson.

To me, the most unremarked development last week was Qualcomm’s demand for arbitration. Unremarked, perhaps, because journalists (Bob Metcalfe aside) haven’t run a business. In normal circumstances, arbitration is a win-win — get a quicker, cheaper resolution without spending piles of money on lawyers. While I don’t know the specific clause in the agreement, Qualcomm’s move implies that they think they have a stronger hand before a neutral third party — absent some new legal theories of IPR royalties of the sort Nokia is trying to establish. In 2003, Nokia requested binding arbitration with InterDigital in 2003 and lost, so perhaps they don’t want to try that route again soon.

But the reality is that (as elsewhere in the U.S.) the only short-term winners are the lawyers. As the UT’s Kathryn Balint reported in an nugget-filled story Monday, Qualcomm’s legal spending has ballooned from $50 million to $200 million a year. Of course, Qualcomm is waging a war on many fronts as its rivals seek to rein in (or end) its business model. Still, Nokia’s lawyers aren’t working for free (and it still has litigation with InterDigital) so its legal spending has also ballooned recently (I’m guessing to approach $100 million/years).

Even if Qualcomm were to win this battle, its legal fights are far from over. As Rob Black of Seeking Alpha blog notes, the next major decision is due May 8 in the ongoing fight with Broadcom.

Technorati Tags: 3G, business models, Nokia, patents, Qualcomm