Nokia sues Apple over iPhone patent infringement

 

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Posted on 23 Oct 2009 at 15:13

Finnish mobile phone maker Nokia is suing Apple in the US for infringing on its patents for mobile phone technology allegedly included in the iPhone.

According to Nokia's press release, Apple is infringing on ten patents "fundamental to making devices which are compatible with one or more of the GSM, UMTS (3G WCDMA), and wireless LAN standards. The patents cover wireless data, speech coding, security and encryption and are infringed by all Apple iPhone models shipped since the iPhone was introduced in 2007."

Nokia claims to have invested more than €40bn (around £37bn) in research and development over the last 20 years.

"The basic principle in the mobile industry is that those companies who contribute in technology development to establish standards create intellectual property, which others then need to compensate for," said Ilkka Rahnasto, vice president, Legal & Intellectual Property at Nokia.

Nokia would be reminded of its own court feud with Qualcomm a couple of years ago, when both companies sued and counter-sued, with Qualcomm threatening to have Nokia phones removed from sale in the US.

It seems that the value of a mobile phone manufacturer is not just in its market share but also its intellectual property portfolio, and much money can be made by licensing this patented technology to other companies.

While Nokia still has 50 per cent of the market, it has lost 22 per cent in the last three years, with Apple picking up 14 per cent of that.

In a recent note to investors, analyst Gene Munster at Piper Jaffray said, "We believe [Nokia] has been in talks with Apple concerning a patent royalty payment for over a year. It appears that the companies have not come to a resolution and Nokia is attempting to hasten the process. Nokia is likely looking to obtain a patent royalty of 1 per cent to - 2 per cent ($6 to $12) on every iPhone sold."

While it seems this is simply a bargaining move by Nokia to hasten the payment of royalties, we can't help but think that the Finnish company must be smarting at the impact of the iPhone on its market share.

The iPhone's ease of use and intuitive touchscreen interface has raised the bar in the industry and made Nokia's Symbian operating system look outdated. Further pressure has been piled on by Google's introduction of Android - like Symbian, an open source platform; but unlike Symbian, more popular with developers.

Author: Barry de la Rosa