A few days after Qualcomm Inc. (QCOM) got slapped with an $853 million fine by the Korean Fair Trade Commission, the leading mobile chipmaker announced it reached a patent license agreement with Meizu Technology Co., the Chinese device maker that had been one of the last holdouts in terms of licensing Qualcomm’s technology in the country.

In a press release, Qualcomm and Meizu announced they reached an agreement in which Qualcomm granted Meizu a worldwide royalty-bearing patent license to develop, manufacture and sell CDMA2000, WCDMA and 4G LTE devices. Qualcomm said the royalties Meizu agreed to pay are consistent with the terms of the rectification plan submitted by Qualcomm to China's National Development and Reform Commission (NDRC). The agreement resolves all of the patent disputes between two companies in China, Germany, France and the U.S. 

A Source of Profit

"Qualcomm is pleased to sign this license agreement with Meizu and to help enhance Meizu's product line and generate strong growth for the company, both in China and globally," said Alex Rogers, executive vice president and president of Qualcomm Technology Licensing, in the press release announcing the deal.

Qualcomm had previously sued Meizu in courts in several countries after failing to get Meizu to pay royalties on its patents. Royalties from licensing its technology is a big business for Qualcomm given more than half of its profits come from that avenue.

 Another Patent Agreement Earlier In Week

Friday’s announcement comes on the heels of another patent license agreement Qualcomm inked with a Chinese device marker. Earlier this week it announced it reached agreement with Gionee Communications Equipment Co. Under that license agreement, Gionee can develop and manufacture devices using Qualcomm’s 3G WCDMA and CDMA2000 and 4G LTE technology in exchange for royalty payments. (See also: Qualcomm Inks Patent Agreement With China’s Gionee.)  

Since agreeing to pay a $975 million fine in China to settle antitrust charges in February of last year, most Chinese device makers have licensed Qualcomm technology. When reporting fiscal fourth-quarter results Qualcomm’s CEO Steve Mollenkopf told The Wall Street Journal that nine of the 10 biggest handset makers in China had inked agreements with the U.S. company. What’s more, he said in some instances the companies made “catch-up” payments from previous quarters.

 Fine Creates New Headaches

While Qualcomm is making inroads with Chinese companies, the huge fine levied against it from South Korea could create headaches for the mobile chipmaker, which is trying to diversify beyond the saturated handset market. 

The KTFC ruled that Qualcomm engaged in unfair business practices regarding the licensing of its patents. The fine, which is the biggest ever lodged against a company in South Korea, is facing a challenge from Qualcomm, which said in a statement the ruling “is an unprecedented and insupportable decision relating to licensing practices that have been in existence in Korea and worldwide for decades and that the KFTC … reviewed but did not question in a previous investigation of Qualcomm.” (See also: South Korea Hits Qualcomm With $854M Fine.)

 

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