In parallel, however, another struggle was quietly taking place, and it was to decide the outcome of the conflict. The battle was between Ericsson and Qualcomm, and Uddenfeldt – together with Lars Ramqvist, Kurt Hellström, Åke Persson and others – spent much of the autumn of 1998 and winter of 1999 being cross-examined by lawyers.
Preparatory hearings on the aforementioned patent-infringement lawsuits had already been held. Several individuals on both sides were required to disclose documents and e-mails that could have some bearing as evidence. The next stage was for each company to form two teams with three or four lawyers in each. For the people at Ericsson, at least, this was exotic.
Uddenfeldt in particularly faced extensive interrogation, partly because he was CTO, partly because he personally held the patents for soft handoff to which Qualcomm also laid claim.
“These teams came in pushing trolleys loaded with all the documents and then they went through them one by one,” says Uddenfeldt. “And it was just like the American courtroom films with lawyers shouting out ‘objection’ whenever a chance came up. The court clerk sat there writing down every hesitation and every word that was uttered. It was an interesting experience but not always edifying, because of the lawyers’ highly developed talent for humiliating the people they examine.”
Persson observes: “There were several of us at Ericsson who had to endure these cross-examinations. At the same time Qualcomm’s staff were exposed to the same treatment from our lawyers. Expensive and time-consuming legal processes are never any fun. My exposure to our opponent’s interest was probably related to the active role I played in marketing WCDMA and my function as public spokesman for Ericsson’s mobile operations.”
Uddenfeldt spent more than 20 full days being examined like this, most of them at Ericsson’s premises in Stockholm. Then the parties carried out a mock trial so they could get an idea of how a real trial might go.
SECRET NEGOTIATIONS
Parallel to the legal process, and independently of it, Ericsson and Qualcomm were holding extensive negotiations. These had begun on the initiative of Åke Persson and took place mainly in New York from June 1998 until March 1999, with a few brief intermissions during the late autumn of 1998.
The main aim was to avoid a real trial where the outcome, despite Ericsson’s strong position, could be expensive and difficult to predict. Persson says: “We were on a collision course with Qualcomm at 100 kilometers an hour, and we needed at least to talk to them.”
But another issue was the fact that Ericsson’s US sales division “was screaming for CDMA”, as Persson puts it. Over just a few years, the company’s market share in the US had fallen from 32 to 18 percent as a result of not chasing CDMA business. Ericsson had however prepared a reserve plan: it had significant technical resources set up in Kista in case the decision on CDMA was reversed.
Persson had support in the negotiations from an American legal team with expertise in intellectual property rights (IPR) and Ericsson’s own corporate lawyers, plus, back in Sweden, Jan Uddenfeldt and Ericsson’s IPR group. Qualcomm was represented in the negotiations by Steve Altman, general counsel and head of the company’s IPR office, CEO Rich Sulpizio and CFO Tony Thornly.
Ericsson was invited to buy both Qualcomm’s mobile phone section and systems operations. After due diligence, Ericsson said no to the former and yes to the latter.
ATTRACTIVE OFFER
Qualcomm’s offer was attractive, Persson says. “It was now or never. We got access to technology, products, the existing customer base and skilled engineers. And the price was right.”
Over dinner, it was suggested to the Ericsson team that they could buy Qualcomm outright. The price was in the region of USD 7 billion dollars. “But we had never envisaged that kind of acquisition and the issue was never raised again,” Persson says.
“The process ended up with us signing an agreement where we took over Qualcomm’s systems division, removed the blocking patents and recognized each other’s standards (WCDMA and CDMA2000). That solved the standardization issue and both companies recognized both standards.” Uddenfeldt adds: “The end result was that Ericsson got all the standards in its portfolio.”
Author: Svenolof Karlsson & Anders Lugn
