Nowadays, everyone understands the principle of “patent is king”. As a high-tech industry in the field of mobile communications, Qualcomm is putting the patents in full swing and truly treating patents as a business.

Let's take a look at Qualcomm's business model.

Founded in July 1985, Qualcomm is a US radiocommunication technology research and development company that is known for its leadership in CDMA technology.

As a leader in the global mobile chip field, Qualcomm has an absolute core position in the field of mobile communication technology in the 3G and 4G era.

Qualcomm does not actually produce mobile phones, its operating income mainly comes from two major blocks: chip sales + patent license.

Qualcomm usually provides its partners with a "patent portfolio package", in addition to the mobile terminal chip, including the relevant patent portfolio, including both Qualcomm's own patents, and Qualcomm's cross-licensing into its own patent portfolio. Third-party quality patents.

In this way, cooperation with Qualcomm means that Qualcomm's partners can not only use Qualcomm's patents, but also use third-party patents in Qualcomm's patent portfolio, eliminating many investment and risks in intellectual property, greatly reducing initial input costs. And get started. Therefore, it is not surprising that most mobile phone manufacturers around the world choose to cooperate with Qualcomm.

Today's smartphones are not patented by Qualcomm

How to charge the Qualcomm patent license?

Qualcomm's approach is:

Instead of authorizing the chip manufacturers, they will charge the patent fees to the customers of these chip manufacturers, in order to maintain their mode of charging according to the whole machine.

Its patent license fee consists of two parts:

First, a fixed license fee (usually fee), usually $500,000 per manufacturer;

Second, the floating royalties (royalTIes), that is, the mobile phone manufacturers are charged a certain percentage of the patent fees according to the ex-factory price of the mobile phone.

The problem is, Qualcomm sales are clearly the chip in the mobile phone, why is it charged a certain percentage of the patent fee according to the ex-factory price of the mobile phone?

This is the "high-pass tax" that has been criticized in the industry - according to the whole machine.

Because the patent license is bundled with the chip, Qualcomm can get a much higher profit than simply selling the chip.

For every mobile phone shipped by a mobile phone manufacturer, in addition to paying for the Qualcomm chip, an additional 5% patent license fee will be paid to Qualcomm according to the price of the whole machine. This patent licensing fee model is called “Qualcomm Tax” in the industry.

Some friends will ask, Qualcomm sells chips, why not authorize chip manufacturers?

Of course, from the perspective of profit, if authorized by the chip manufacturer, Qualcomm can not continue to charge to its customers, that is, mobile phone manufacturers, and it is unable to maintain its existing mode of charging according to the wholesale price of the whole machine.

Qualcomm has become one of the most profitable technology companies in the world with its “Qualcomm Tax”.

In China, Qualcomm not only implemented a business model of chip sales + patent licensing, but also added a "free anti-license" .

What does that mean?

When Qualcomm signs an agreement with Chinese companies, mobile phone manufacturers want to use Qualcomm chips, provided that they have signed a patent licensing agreement with Qualcomm to deauthorize the relevant patents of mobile phone companies to Qualcomm free of charge, and stipulate that these patents should not be used to sue other customers of Qualcomm.

Qualcomm has integrated all relevant patents through free counter-licensing, which can effectively avoid patent disputes and make Qualcomm's chips more popular with mobile phone manufacturers.

This is Qualcomm's "free anti-license" policy.

Qualcomm uses its own advantages, through the core patents that other mobile phone manufacturers cannot circumvent, there is really a feeling of “grab the money”!

However, it can't be too smug. Although patents are open to monopoly, they can't break the legal bottom line, otherwise they will accept the "anti-monopoly" investigation.

In November 2013, the National Development and Reform Commission initiated an antitrust investigation against Qualcomm based on the report. After more than a year, the National Development and Reform Commission identified in February 2015 that Qualcomm’s monopolistic behavior was established and imposed a fine of RMB 6.008 billion.

The National Development and Reform Commission believes that Qualcomm has a dominant position in the CDMA, WCDMA, LTE wireless communication standard essential patent licensing market and the baseband chip market, and has implemented abuse of market dominance. The NDRC also proposed a number of rectifications for the core patent license of Qualcomm's business model. Claim:

1. For mobile phones sold for use in China, the patent license fee is charged at 65% of the net wholesale price of the whole machine;

2. When a patent license is granted to a Chinese licensee, a patent list will be provided, and the license fee for the expired patent may not be charged;

3. The Chinese licensee is not required to make a free reverse license for the patent;

4. When carrying out the wireless standard essential patent license, the non-wireless communication standard necessary patent license shall not be tying without proper reasons;

5. When selling baseband chips, the Chinese licensee cannot sign a license agreement containing unreasonable conditions, and cannot challenge the patent license agreement as a condition for supplying baseband chips to Chinese licensees.

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