How much of WCDMA's intellectual property comes from Qualcomm? (NSDQ:QCOM) We believe CEO Dr. Paul Jacobs spelled it out quite well in the company's 3Q06 conference call. By looking at the overall citations from new inventors referring to for various existing WCDMA related patents. By Qualcomm's calculation, its own WCDMA patents take 47% of the total citation pie. Sony Ericcson is next in line with 21%. Nokia? 3% Texas Instruments? Under 1%.
However, as one indicator of the significance of our contributions to open standards, publicly available sources can be used for one objective measure of the value of essential patents in the WCDMA standard by examining how often patents essential to the WCDMA standard were cited as prior art in the patents of other inventors. While we do not believe that [accounting] schemes if any kind are a reliable measure of the value and quality of patents, the frequency with which once patents are cited by others is obviously more of an indicator of the importance of a patent portfolio than simply counting essential patents in a standard.
Looking at citations is a measure of significance somewhat analogous to the way Google ranks Web pages by examining the links, the number of links to that page. When you factor out citations by a company of its own patents, QUALCOMM has 47% of the citation-weighted portfolio of essential patents for WCDMA, followed by Ericsson at 21%.
Significantly, Nokia has only 3%, NEC 2%, Panasonic 1%, and TI and Broadcom have less than 1%. Of course, to reiterate, the best measure by far of the value of QUALCOMM's patent portfolio is the 130 arms-length license agreements that we've negotiated over 15 years with nearly every major supplier in the industry. Those agreements have established, confirmed and reconfirmed our patent portfolio's market value.
We continue to believe that the operation of free market forces provides the only true indicator of patent value, but looking at citations provides another interesting indicator of innovative importance.
-from 3Q06 earnings result conference call