Nokia to Apple: Pay Up

By Nathan Lambeth

On Thursday, Finnish mobile phone giant Nokia Corporation filed suit against Apple, Inc., alleging that Apple’s iPhone infringes on ten patents held by Nokia. The patents in question cover wireless data transmission, digital encoding of speech, and security and data encryption, and are essential to such vital standards as GSM, UMTS, IEEE 802.11 — standards vital to practically all smartphones, including all the models of Apple’s iPhone. Nokia seeks damages that some estimates place as high as USD 1 billion.

Nokia has been a major player and leader in R&D in the mobile phone field since the era when cellular phones were so large they required installation in your vehicle. The company developed some of the first examples of so-called “smartphones” — mobile devices integrating internet connectivity, email, and of course the ability to make phone calls — and has led the global market in developing devices with features we’ve become accustomed to such as cameras, push-to-talk, and GPS. Despite its global dominance and advanced devices, Nokia has struggled to maintain market share in North America.

Enter Apple, Inc. In 2007, the iconic computer company launched the now-ubiquitous iPhone and, as they are wont to do, reinvented the smartphone market. As with many Apple products, the iPhone wasn’t the first device to offer its set of features, but with a clever mixture of design, integration, and (let’s face it) marketing and hype, the iPhone now holds 52% of the North American smartphone market and 40%  worldwide.

Nokia’s complaint (full text, PDF) makes it clear that the two tech giants have been in licensing negotiations for Nokia’s considerable IP holdings since the iPhone’s release, alleging that Apple has refused to compensate Nokia on “fair, reasonable, and nondiscriminatory terms and conditions.” Nokia accuses Apple of “free riding” on its IP and seeks injunctive relief until Apple pays accumulated royalties and commits to payment in the future. Analysts have determined Apple’s liability could be USD 200 million up to USD 1 billion. Nokia also seeks an award of attorney’s fees and other costs of the suit, both of which could be quite large if a case like this ever actually went to trial.

Nokia invents wireless technology, Apple uses said technology, Nokia shows Apple the price tag, Apple rejects it, and Nokia files this lawsuit as part of the “negotiation” process. Thanks are due to The Beatles for a good summary:

“The best things in life are free
But you can keep ’em for the birds and bees
Now give me money (that’s what I want)”

Photo courtesy of Flickr user 1Happysnapper.
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