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Summary:

Nokia said today it’s suing Apple over the alleged infringement of patents pertaining to WLAN, GSM and UMTS. The suit underscores the degree to which Apple has overtaken Nokia in the smartphone space; Nokia is clearly hoping it can be more successful in the courtroom than it’s been in the marketplace.

[qi:105] Updated: Nokia is suing Apple over the alleged infringement of patents held by the Finnish handset maker pertaining to WLAN, GSM and UMTS. Nokia said in a statement:

The ten patents in suit relate to technologies 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.

“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. “Apple is also expected to follow this principle. By refusing to agree appropriate terms for Nokia’s intellectual property, Apple is attempting to get a free ride on the back of Nokia’s innovation.”

Nokia is holding a conference call about the suit; We’ll be back with more details in a little while. Update: The technologies at the heart of the lawsuit have been licensed to several dozen other companies by Nokia. Notably, the filing comes more than two years after the launch of the initial iPhone and follows extended negotiations between the two companies.

But the timing of the suit also underscores the degree to which Apple has overtaken Nokia in the smartphone space. Nokia last week reported its first quarterly net loss in more than a decade as its North American sales tumbled by nearly a third. Apple’s momentum, meanwhile, just keeps growing. (Apple representatives were not immediately available for comment.)

Nokia is looking to collect patent royalties of 1 or 2 percent for each iPhone sold, according to a note from Piper Jaffray’s Gene Munster, which — given the roughly 34 million iPhone units already in the hands of users — would amount to $200 million-$400 million. That’s not a lot of money to either company, of course. But Nokia is clearly hoping it can be more successful in the courtroom than it’s been in the marketplace.

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  1. Let the mobile wars begin… Nokia is suing Apple; Verizon and Google are squaring off against Apple and AT&T…

  2. It is the American way, if you can beat them in business then sue them and try to beat them in court so you can have the government subsidize your business.

  3. The time is very interesting, just right after Nokia reported a huge loss and Apple reported best sales. One is of sure. It’s going to be a long trial or very short. It’s so Broadcom vs Qualcomm all over again

  4. Interesting timeing indeed. But if the price is that low (the 1-2% quoted) then its nothing but pocket change for APPL. Pay it, license the tech and get on with it.

  5. Isn’t a third of nearly nothing still nearly nothing? An how have Apple overtaken Nokia? Nokia still have a 35% share of the smartphone market? I think the wording of your postings betrays a purely American viewpoint.

    And as has been reported many, many times, all the losses were in the network equipment (and even then they were nearly all book keeping losses). The phone side is still very profitable.

    As for the timing, I can’t imagine it has much do with anything. This has been going on for a long time already. Obviously Apple likes to play hardball. So I guess they get what they want.

    Nokia is no stranger to the courtroom either. You only have to see the fight with Qualcomm over very similar issues.

    1. Hamranhansenhansen Jody Thursday, October 22, 2009

      > Nokia still have a 35% share of the smartphone market

      You say “still have” because they have 35% and dropping. But market share is not the only metric. Apple has only 10% of US retail computer sales but takes more than half of the profits. Nokia just had their most unprofitable quarter while Apple just had their most profitable.

      1. @ Hamranhansenhansen

        You missed the point. The phone division of Nokia was NOT unprofitable. They made a rather large pile of cash last quarter.

    2. Yeah but Apple have like a gazillion percent share in Silicon Valley and that’s all that matters. And Jobs you know like, walks on water man.

  6. Dilip C. Andrade Thursday, October 22, 2009

    it’s a bit unfair to characterize the situation as Nokia going after Apple because they are losing ground. If they have patents that map onto standards (or patents covering features that Apple is making use of) then they have every right to ask for just compensation.

    You’ll note that they’re looking for something that actually appears to be a fairly reasonable royalty rate. They cannot be accused of being a troll, they actually make products.

    Remember, when Steve Jobs showed off the first iPhone he boasted about how many patents they had filed. Now Apple gets to learn the lesson that RiM learned years ago (well before the NTP suit). GSM phoes are a mature market, and the underlying technology has been patented up the wazoo. If you don’t have patents to put into the pool (or don’t want to put your patents into the pool to keep your advantage) then it’s a pricey business.

    1. What will be interesting to see relative to this one is that while on the one hand there are a ton of historical patents (owned by Nokia and others), on the other, Apple has built up a pretty massive patent portfolio for a number of the logical ‘toll bridges’ one has to pass through to make mobile computing work.

      In other words, the counter play is to say “You sue us on these, the minute you try to emulate us in these other areas, we’ll sue you.” As a consequence, often the net out is some (negligible) settlement where each side cross-licenses the other’s IP

      Mark

  7. I am seriously beginning to wonder why I still read GigaOm. Om has such a California-centric view of the world that it hurts. I would not have thought that Om was a big Apple fan given his earlier posts on the company, but now I’m beginning to think that they may pay some of the bills. ;-) Where is the impartiality (and fact checking) in the reporting?

    Networks caused the loss for Nokia, not the pathetic market share in the US. If you didn’t notice, Nokia wrote off a big chunk of NSN’s value. Market share in the US has been pathetic for some time now. This is nothing new.

    Intellectual Property is just that…property. It can be licensed, but should not be used for commercial gain without compensation. It is a principal. A few hundred million dollars are not going to make much of difference to either company. Usually, these start out as negotiations that go nowhere…then they turn into lawsuits. So, I’m sure they have been trying to work something out for awhile. Perhaps Cupertino figured that forcing Nokia to take this step would make them look bad.

    1. Hamranhansenhansen Jukka Thursday, October 22, 2009

      > Om has such a California-centric view
      > Apple fan

      You don’t have to be in California to make the judgement that Apple is doing well right now and Nokia is not. Read the news.

      1. @ Hamranhansenhansen

        You should actually read the news yourself instead of just the flamebait headlines. Then you might have a better idea of the real situation. Or maybe you could actually read the financial reports.

  8. Microsoft did invest $150 million in Apple back in 1997 linked to a “settlement to a long-standing dispute over whether Microsoft’s Windows operating system infringes on any of Apple’s patents.” oh well, Windows is the dominant desktop OS today, and Apple’s featurephone OS isn’t. http://news.cnet.com/2100-1001-202143.html

  9. Wow, and this is just 3G. Wait until 4G where IP is more widely distributed and has much more potential outside of laptops and handsets. Then we’ll see some real litigation. Let’s face it – 3G wireless has always used IPR as a competitive weapon and revenue generator – other consumer electronic vendors that will be increasingly interested in incorporating wireless are not. That clash of cultures should be interesting to watch.

  10. Would like to know which specific patents Nokia is citing. Was hoping somebody would have reported the patent #’s rather than generic technology areas. Anybody know?

  11. Let’s hope this drives more innovation, not less. It’s almost refreshing to see a non-patent-trolling company file a suit like this, as they have much more credibility, seeing as how they actually make products.

  12. This whole case is a non-issue. Its not going to be a problem to Nokia nor to Apple.

    Apple is going to continue to make iPhones and Nokia continuous to make Symbian phones. Couple of tens or even hundreds of millions here or there make no difference.

    In the long run however, Nokia has the risk that they just become yet another royalty collector.

    Maybe, they are practicing that with this move :)

    J

  13. Cell phone reviews Friday, October 23, 2009

    The iPhone has been out for years with this tech, and Nokia is just now saying something? That’s ridiculous, and petty, and quite frankly looks desperate.

  14. Note to every mobile company out there – if you want that Nokia should not sue you..”just stay behind Nokia.”..Samsung beware…

  15. I guess when your marketshare sucks in North America, you gotta find other ways to make money. I remember the days way back in the mid-late 1990’s when Nokia took the cell world by storm with their funky and easy to use phones.

  16. getting pregnant tips Friday, October 23, 2009

    The damn phone has been out for over 2 years. They are obviously not aggressively enforcing the rights violations they are alleging after so much time. Legally they might be within the time frame, but we all know that companies wait years so that settlements will be higher than ever.

  17. Jukka, I know why I read this stuff: to keep my head screwed on straight and keep an open mind, see the other side of the story. Well, the story as USA sees it, anyway.

    Om, aren’t you going to make some comment about Nokia being “anti-business?” You crack me up! I believe it has already been suggested elsewhere (your recent n900 review if I’m not mistaken), flamebaiting Nokia seems to be your tactic for gaining readership & comment. Seems to be working. Worked on me ;-) Nokheads indeed. It’s Nokians. This from the country that bought us the crackberry.

  18. You say Nokia is looking to collect patent royalties of 1 or 2 percent for each iPhone sold ( $200 million-$400 million). If this is small amount to both companies, why did they fail to resolve this issue outside the courtroom? I somehow think that there is more to this issue.

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