Qualcomm has modified its patent licensing fees, allowing device makers to take advantage of more patents at a cheaper price. For a complete set of patents, the semiconductor company charges smartphone manufacturers five-percent of the net selling price of their handsets, while also offering a cheaper option wherein manufacturers only have to pay 3.25-percent for a package that only contains the patents necessary for the mobile device to run on cellular networks. However, Qualcomm recently decided that it will include more patents into the cheaper package, making it easier for device makers to choose the more affordable option. Among the patents that Qualcomm will include into the cheaper package at no additional costs are the tech firm's 5G network patents.
The rationale behind the changes made to the patent deals is to ensure the stability of Qualcomm's licensing business in the future by appealing to manufacturers and regulators. Within the last few months, the company has been negotiating with two major customers that have decided to stop paying it for its patents. The duo has been identified as Apple and Huawei, i.e. the second and third-largest device maker in the world, respectively. It has been previously reported that Huawei has not been paying Qualcomm for its patents since April of 2017. By changing its patent deals, the semiconductor firm hopes that its tensions with the two device makers will be resolved and the duo resumes making regular payments. Aside from Apple and Huawei, Qualcomm also recently had a legal dispute with Samsung Electronics, although the semiconductor firm was able to strike a deal with the tech giant last January. The deal involved the expansion of existing cross-licensing agreement, as well as the cessation of Samsung's meddling in Qualcomm's dealings with the Korea Fair Trade Commission.
Another benefit that Qualcomm sees in changing its patent licensing model is that doing so could result in more companies opting for the more expensive set of patents rather than the package that only contains the essential ones, presumably because it would generate more goodwill among its clients and possibly even prompt them to go all-in with protected technologies in order to differentiate from their rivals. Qualcomm has also recently reduced the cap on the net selling price used for basing its patent charges from $500 to $400, additionally bringing down the licensing costs of its clients.