Nokia, the world’s largest cellphone manufacturer, is suing Apple in a US court, alleging the iPhone infringes 10 of its wireless patents, in a move that could cost the Californian technology firm tens of millions of dollars.
The two companies have been locked in talks to agree a licensing deal that would see Nokia receive payments for the technology it has developed, which has become an industry-wide standard. Talks, however, failed to reach a settlement and Nokia has started legal proceedings, which are unlikely to enter court until the end of 2011.
A Nokia spokesperson said that Apple would be able to continue developing the iPhone and shipping existing models, even though the company alleges that every device breaches its patents.
“We are not seeking to disrupt the business of any operator or the company, we are looking to get appropriate compensation for our intellectual property,” he said. “For Nokia, legal action is always a last resort.”
He refused to say the price Nokia wanted for use of the 10 patents at issue, but typical licence payments are a few dollars. Apple has so far shipped more than 30-million iPhones since the first 3G version was launched in 2007. Analysts at RBC Capital Markets believe it could sell at least that many next year and as many as 80-million a year by 2012.
With each device requiring a licence, any “appropriate compensation” for Nokia could run into tens and even hundreds of millions of dollars.
Nokia’s spokesperson, however, emphasised that with the case unlikely to enter the courthouse until the end of 2011, the door is not shut to Apple doing a deal. Apple was unavailable for comment.
The Finnish mobile phone manufacturer, which makes almost four in every 10 cellphones sold worldwide, is no stranger to legal fights. It fought a three-year battle with American microchip firm Qualcomm across three continents, causing intense investor unease on Wall Street, before the two sides agreed a 15-year deal last summer.
Announcing it had filed a complaint against Apple with the Federal District Court in Delaware, Nokia said the 10 patents at issue related to technologies that were “fundamental” to making devices that are compatible with one or more of the current wireless standards — GSM, UMTS (3G WCDMA) and wireless LAN.
“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 said.
The company said it has invested more than €40-billion in research and development over the past two decades and has successfully entered into licence agreements including these patents with approximately 40 companies, including virtually all the leading cellphone vendors.
“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.”
Geoff Blaber, director of devices and platforms at industry experts CCS Insight said Nokia’s move “is not altogether surprising”.
“The company has an enormous patent portfolio and their investment in innovation is as important to Nokia as its devices and services businesses. It is a large revenue stream for Nokia,” he said.
It also gives Nokia the chance to take a shot at one of its newest — and most bitter — enemies. News of the patent dispute comes after Nokia earlier this week unveiled its first quarterly loss for more than a decade. The company has seen the lucrative market for smartphones, which it used to dominate, invaded by the iPhone as well as RIM with its Blackberry device.
More recently, Google has made in-roads with phones using its Android software made by the likes of HTC, Motorola and Huawei. Palm, meanwhile, has reappeared with the Palm Pre, which runs a new version of Palm OS, while Microsoft has relaunched its Windows Mobile platform as Windows Phone to try and increase its share of the market for mobile phone software.
Earlier this week Nokia’s smartphone software provider Symbian announced it was making its platform free to all users nine months ahead of schedule to see-off the threat of Google’s Android.
The move came as rumours run rife that Google is about to unveil the latest version of its software platform. Android 2.0 is rumoured to be nicknamed eclair, following on from version 1.5, which was branded “cupcake”, and version 1.6, codenamed “donut”. Much of the naming speculation comes after a video surfaced on the internet showing Google staff placing a giant eclair on the lawn of the company’s Mountain View headquarters, next to the existing cupcake and donut whose appearance had heralded previous software releases.
While there is talk that the soon-to-be released Motorola Droid cellphone and the Sony Ericsson X10 will both run Android 2.0, Google is also working on an own-brand handset, according to Ashok Kumar, an analyst at Northeast Securities.
Kumar has apparently talked with Google’s design partners about the plan, and its chosen smartphone manufacturer will have a Google-branded phone in shops later this year. Crucially, however, he says that the phone will not be sold through network operators, which means it is likely to be expensive. In many countries — especially the Britain — the cellphone companies subsidise the cost of handsets, making them free to customers, and recoup the cost over the length of the customer’s contract.
The creation of a so-called Gphone would give Google the chance to show exactly what the Android platform can do, without having to rely upon a third party’s hardware. But it would also risk alienating the mobile phone network and handset partners that Google has worked with over the past two years to get Android to the market. – guardian.co.uk