Finnish telecommunications equipment maker Nokia Corp. Thursday said
it will pay $20 million to chipset maker Qualcomm Inc. to cover
patent licenses in the second-quarter of 2007.
The companies have been embroiled in a series of lawsuits against
each other concerning intellectual property rights and patent
infringements, but Nokia says Thursday's payment is unrelated to
those disputes. It says it's willing to pay fees for this new
license, which relates to the European Telecommunication
"As we continue to negotiate the new cross-license agreement, Nokia
views this payment as fair and reasonable compensation for the use of
relevant Qualcomm essential patents in Nokia UMTS handsets during the
second quarter of 2007," said Nokia Chief Financial Officer Rick
Qualcomm said it filed an arbitration claim Thursday that would
require Nokia to continue paying the same royalty rates as a 2001
licensing agreement if the two sides fail to renew the pact before it
expires next week, April 9.
Lou Lupin, Qualcomm's general counsel, declined to say how much money
it gets from Nokia but said $20 million is "a fraction."
"The amount, as far as we can tell, was picked out of the air," Lupin
told The Associated Press.
Qualcomm's claim before the American Arbitration Association also
seeks that Nokia be prevented from filing patent claims against its
rival over a mobile phone standard known as CDMA, or code division
Nokia signaled that it would be aggressively contesting the old
patent license agreements with Qualcomm that are set to expire next
Nokia and Qualcomm have been embroiled in a number of intellectual
property and licensing disputes over the last year and the companies
are currently at loggerheads on how much Nokia should pay Qualcomm
for using its code division multiple access, or CDMA, intellectual
property in North America.
Richard Windsor, an analyst at Japanese investment bank Nomura, said
Nokia has pulled of a "strategic master stroke" by doing this.
Windsor said the deal signals how much Nokia is willing to pay
Qualcomm for royalties and by doing so, Nokia significantly reduces
the risk of being found guilty of "willful infringement" in any
patent lawsuits that follow with the San Diego-based chipset maker.
Willful infringement is something Nokia cannot afford as punitive
damages could cost it as much as three times the existing royalty
rate in damages, he says.
"By reducing this risk Nokia will be able to fight harder and hold
out longer against the legal blanket bombing that we think is being
prepared by Qualcomm," said Windsor.
Windsor added that the move lengthens considerably the wait Qualcomm
might have to endure before it gets paid the royalties that are due
Qualcomm says it doesn't need Nokia patents
Qualcomm Inc. threatened to forbid Nokia Corp. from using its patents
forever, the strongest blow yet in the ongoing battle between the
mobile technology companies.
At the heart of this threat is a new assertion by Qualcomm that turns
the current negotiations between the companies on its head.
"We don't believe we actually use their patents," said Lou Lupin,
general counsel at Qualcomm. "It hasn't been an issue up until now,
but there's a serious question about whether in fact we use any of
their patents. It's likely an issue that will be hard fought over the
Nokia and Qualcomm have been locked in a bitter renegotiation process
over a patent licensing contract that expires Monday. Nokia asserts
that Qualcomm's contributions to current mobile standards have
decreased such that Nokia ought to pay less to license Qualcomm
patents. As part of the negotiations, Nokia has relied on its own
patent portfolio, arguing that Qualcomm has as much to lose as Nokia,
if not more, if a new contract isn't signed, because Qualcomm would
lose the rights to use Nokia's intellectual property.
"Nokia retains the right to ask Qualcomm, and its customers, to
respect Nokia's patents rights," the company said in a statement
Thursday. "The retained rights have significant value, and Nokia
believes it is well positioned to offset any claims Qualcomm may make
against Nokia products to claim more money in license fees."
Qualcomm appears to be pursuing a new strategy in stating that it may
not need any of Nokia's intellectual property.
Actions by both companies on Thursday indicate that they also have
very different opinions about what they think should happen if Monday
passes without renewing the contract. Qualcomm requested that the
American Arbitration Association rule that if Nokia continues to sell
phones using Wideband Code Division Multiple Access technology past
the contract expiration, it constitutes a decision by Nokia to extend
the existing contract. Qualcomm also asked the arbitration court to
rule that such an extension prohibits Nokia from suing Qualcomm.
Qualcomm also asked for a ruling that would entitle it to cut off
Nokia's right to license Qualcomm patents, if Nokia does sue Qualcomm
for patent infringement after Monday. "If they continue to use our
patents ... we believe there are obligations that come along with
that. If they don't meet those, then they're in breach of our
agreement and we're entitled to damages and we could terminate their
rights to our patents forever," Lupin said.
Best regards, SEE THE FAQ FOR CINGULAR WIRELESS AT
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>