Nokia has sued Apple over claims that the iPhone infringes on 10 of its wireless technology patents. The suit appears to be an attempt to squeeze Apple for higher royalties than the iPhone maker is currently willing to pay.
Nokia is claiming that Apple is unfairly profiting from Nokia's hard work and €40 billion investment in developing wireless communications technologies with its iPhone. The company has today filed a patent infringement lawsuit against Apple, alleging infringement on ten of Nokia's patents related to GSM, UMTS, and WLAN standards.
The ten patents in question cover aspects of 2G and 3G wireless connections, as well as WiFi integrated into mobile phones. Nokia has an extensive patent portfolio, claiming it has "over 10,000 patent families" and has been embroiled in other, related IP litigation with other industry players over the past several 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, Nokia's Vice President of legal and intellectual property, in a statement. "Apple is also expected to follow this principle. By refusing to agree [upon] appropriate terms for Nokia's intellectual property, Apple is attempting to get a free ride on the back of Nokia's innovation."
It's worth noting that this kind of patent litigation was roundly criticized by Nokia when it was being sued by Qualcomm over similar patents. Qualcomm had launched no less than 11 patent infringement lawsuits against Nokia between 2005 and 2007 that related to the technology used to access 3G wireless networks. "This whole [dispute] might have an impact on 3G technology," Nokia CTO Tero Ojanpera warned at the time. The brush-up was eventually settled when the two companies made a cross-licensing agreement that also included transfer of several patents to Qualcomm as well as up-front and continuing royalty payments by Nokia.
At the time, Nokia had been trying to negotiate lower royalty payments to Qualcomm, and Piper Jaffray analyst Gene Munster thinks this is that heart of the matter between Nokia and Apple. "We believe that Nokia is not seeking an injunction; rather, we believe that the company has been in talks with Apple concerning a patent royalty payment for over a year," Munster said in a note to investors. "With today's announcement, 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 percent to 2 percent ($6-12) on every iPhone sold in compensation for its IPs concerning GSM, 3G and WiFi technologies on mobile devices," Munster further explained. However, a $12 royalty per iPhone is highly unlikely, he said, and even if the suit is decided in Nokia's favor, it shouldn't have serious material impact on Apple's performance.
Nokia once dominated the global market for smartphones, with its Symbian-based mobile handsets garnering three-quarters of the market share. However, since the launch of the iPhone, it has dropped to about 50 percent share. Meanwhile, Apple has grabbed 14 percent of the global market, with the rest lost mostly to Android and RIM devices.
Source: ars technica