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Qualcomm Looks to Safeguard Patents With Reorganization

Qualcomm on Thursday said it had restructured its business operations, adding a new unit to handle the chip business as the company tries to protect its portfolio of patents, which includes key mobile communications intellectual property.

The company has shifted its chip operations, including its Snapdragon product portfolio, to the new Qualcomm Technologies Inc. (QTI) unit, which will also be responsible for research and development. The parent Qualcomm unit will own patents that include IP related to 3G and 4G communications, which are central to the company's product offerings.

Qualcomm has thousands of patents related to CDMA (code-division multiple access) mobile communication technology, which was first commercially deployed in 1995. Qualcomm also holds patents related to 3G communications based on CDMA, and also holds 710 LTE 4G patents, according to a study released by iRunway in April. Patents related to mobile technologies generate 90 percent of the company's patent licensing royalty revenues.

The patents are becoming important as the use of mobile devices proliferate and as the use of 3G and 4G networks increases. Apple uses Qualcomm's baseband chips in its iPhones and iPads. Qualcomm is also pushing its Snapdragon chip for smartphones and tablets, and its latest dual-core Snapdragon S4 chip has an integrated 3G/4G radio. Tablets and smartphones with Snapdragon chips already run Google's Android and future laptops and tablets will support Microsoft's Windows RT operating systems.

The new QTI unit will increase open-source software contributions in the future, which will be separated from the 3G and 4G patents, the company said. Qualcomm has stepped up the development of software around the Linux OS as it builds a software portfolio for tablets and smartphones based on Snapdragon chips. QTI will continue to own patents tied to open-source community contributions.

The change is being implemented to deliver products and services more quickly, and to protect and insulate its patent portfolio from any claims, Qualcomm said in a statement. The restructuring is not in response to any third-party actions or claims, the company said.

Qualcomm was in protracted legal battles, most notably with Broadcom and Nokia, both of which were settled.

Qualcomm is one of the more aggressive patent licensing companies, and the company made a move to protect its key patents, said Jim Bessen, a lecturer at the Boston University School of Law.

"They want to separate the patents related to technologies that are their crown jewels," Bessen said.

Qualcomm has a very valuable patent portfolio for 3G and 4G, and the move makes it easier for the company to make contributions to the open-source community .

Patents are not needed to make contributions to the open-source community, but now Qualcomm can create a portfolio of contributions that can also be used defensively to protect the open-source community, Bessen said. IBM and other companies have already made such open-source contributions, Bessen said.

For a company like Qualcomm, its patents are prime assets and it has to ensure that it doesn't weaken its patent rights, be it intentionally or just because of someone's oversight in dealing with open-source licenses, said Florian Mueller, a patent expert who consults with technology companies such as Oracle and Microsoft.

Qualcomm has kept most of its patents in the existing parent company, while other companies spin off patents into new entities to prepare for a sale or to ratchet up monetization, Mueller said. The new subsidiary has been created to ensure the new unit's interactions with open-source software won't weaken the parent company's patent rights, Mueller said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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