On Feb 9, US chip maker and wireless SEP-holder Qualcomm reached a concluding settlement with the National Development Reform Commission (NDRC) of China, under the Anti-Monopoly Law investigation it has been subject to.
In practice, the settlement results in Qualcomm's cellular SEP portfolio royalty rate being 3.25% of the net selling price of 3G- or 3G/4G-compliant devices sold in China. Clearly the Chinese authorities deemed Qualcomm's original rate to be unreasonably high, since the imposed discount is almost 35%.
But besides that specific message to Qualcomm, a broader message can also be detected here. China tells the world that it does not embrace market disruptiveness with respect to the cellular SEP FRAND licensing model per se. It confirms the applicability of long-standing basic SEP-portfolio licensing principles, with the end-product price as the royalty-base and royalty rates in the order of lower single-digit percentages for strong SEP-portfolios.
This message from China is actually a powerful endorsement of the importance of basic wireless R&D to the ecosystem. Hopefully regulators and policy makers worldwide will consider this input when confronted with various SEP-devaluing proposals popping up in recent times.
This message from China is actually a powerful endorsement of the importance of basic wireless R&D to the ecosystem. Hopefully regulators and policy makers worldwide will consider this input when confronted with various SEP-devaluing proposals popping up in recent times.