US vendor pledges not to charge discriminatory royalties in China

InterDigital says it will no longer charge Chinese companies discriminatory royalties, as it seeks to end an antitrust probe by China's industry regulator.
Written by Cyrus Lee, Contributor

InterDigital has pledged not to charge Chinese companies discriminatory royalties following an antitrust probe initiated by the country's industry watchdog. 

The U.S. vendor has submitted an application to suspend the probe by the National Development and Reform Commission (NDRC) in China and said it would treat Chinese companies in a fair, reasonable, and non-discriminatory way. This effectively meant it would no longer charge discriminatory licensing fees to Chinese licensees, according to a NetEase report Friday.

NDRC earlier this week said it was in discussion with InterDigital over allegations it exploited its dominant market position to collect discriminatory charges from Chinese enterprises. The U.S. vendor, which holds patents for wireless devices and networks, was alleged to have received unreasonably high royalties from Chinese enterprises at amounts of up to hundred times higher than the patent fees it collected from other foreign companies, said NDRC.

It said the U.S. company charged patent licensing fees equivalent to 2 percent of the device prices in China, but only 0.019 percent of the device price offered by another foreign brand, resulting in a difference of 105 times.

An official from the China Mobile Alliance said the discriminatory treatment toward Chinese companies was "very unfair", placing Chinese mobile handsets in an inferior position on the global competitive landscape.

When NDRC concluded its investigations, InterDigital reached the compromise and Chinese officials expect the U.S. vendor to treat Chinese companies in a fairer way in future. Large Chinese handset markers such as Huawei and ZTE will benefit most from the antitrust probe due to their significant global market share, the report noted, citing a industry watcher.

The probe followed another of NDRC's investigation on leading U.S. chipmaker, Qualcomm, accused of violating the country's anti-monopoly laws.

In 2011, InterDigital had filed lawsuits against Huawei and ZTE, claiming the two Chinese tech giants had violated its patents and demanded a ban on the Chinese vendors' 3G device in the U.S. market.

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