QCOM: Litigation Update

Implications: As much as everyone yearns for closure, the reality of the QCOM/NOK fight is that we still have years on the clock.

Analysis: QCOM's most recent public comments on the NOK fight have been refreshingly honest.  The firm is optimistic about the first phase of the Delaware trial; the firm is hoping that settlement might follow afterward; but the reality is that the NOK fight could last for some time.

Delaware is admittedly important.  The Delaware decision will likely resolve the fight over whether the SULA was renewed (it wasn't), and then direct the parties as to whether their fight ought to continue in Delaware (as a contract fight) or in patent court (as a patent fight). 

But Delaware is not the light at the end of the proverbial tunnel.  Instead, Delaware is all about choosing a tunnel that will then in turn someday have a light at its end.  That is, there is almost no way that Delaware can either itself end the fight this year or put sufficient pressure on the parites to settle.

Why can't Delaware end things this year?  The reason is that there is only one legal theory that would allow the Delaware court to set a royalty rate, and that theory -- QCOM's "implicit renewal" theory -- has as little chance of winning as my little boy has a chance of shooting a half-court shot.  (In case you are wondering, he's three, and he can't even hold a baskball reliably.)  All the other theories just open the door to the next round of litigation; and each option would take 2-3 years to litigate fully.

Why can't Delaware drive settlement then?  Again, because Delaware's "worst" plausible outcome is just an outcome that sends the parties to another few years of litigation.  NOK can surely wait through that -- and maybe get some help along the way from the European Commission; and QCOM is unlikely to be able to offer NOK a sweetheart deal as a lure, because any such deal would look to the European authorities like an admission of guilt.

So, will Delaware be informative?  You bet.  We will learn there all sorts of nuances about how the next stages will be argued.  But is Delaware the end?  Hardly.  Exactly as QCOM is telling everyone.