Qualcomm denies Korea royalty claims

Qualcomm has not commented on the details of the agreement. However, according to Korean media reports, ETRI's share of Qualcomm's Korean royalties is 20 per cent.

Furthermore, the reports say, in a dispute between the two sides in the late 1990s, international arbitrators found that Qualcomm had paid only 11 per cent, rather than the full 20 per cent agreed.

Qualcomm announced in 2000 that it would pay ETRI $86m to cover this shortfall over the previous eight years of the agreement. The company expected that the additional annual payment to ETRI in future would be in the order of $16m.

The data on additional royalty sharing payments and estimated payments released by Qualcomm, together with the details of the joint development agreement reported in the Korean press, suggest that the company was earning approximately $177m from these royalties per year in Korea in 2000 and 2001.

This number agrees with data on Qualcomm's Korean royalties released by ETRI's affiliate, the Market Intelligence Center (MIC). According to the most recent royalty data from the MIC, in 2005 Qualcomm earned $467m from Korean royalties.

It is not clear whether all of this revenue was covered under the joint development agreement, which relates to basic CDMA technology.

If it is, however, then the extra income for Qualcomm from August, when payments to the ETRI end, will be more than $93m annually, assuming its Korean royalty revenue continues to increase as it has in recent years.

Yesterday's reports are at least the second time that Korean media has claimed that Qualcomm royalty payments will cease. The company also denied similar claims last year.

The local media reports come against a background of discontent worldwide at the company's dominance through an extensive patent portfolio of key mobile phone technologies.

Competitors and phone makers are involved in a series of legal actions with Qualcomm, involving claims and counterclaims of anti-competitive behaviour and alleged patent infringement.

Governments have also become involved. In Korea, Qualcomm's offices were visited by anti-trust officials in April, and in China, the government has delayed the introduction of 3G mobile phones, despite huge demand, while it attempts to develop its own technology which it hopes will have reduced royalty obligations.