Apple Escalates Patent Dispute With Nokia

Apple has now escalated a legal battle for smartphone market share with Nokia, accusing the Finnish mobile phone giant of anti-competitive practices and patent infringement.

"Other companies must compete with us by inventing their own technologies, not just by stealing ours," said Apple’s vice president Bruce Sewell in a statement.

Apple’s move, alleging that Nokia had breached 13 of its patents, counters Nokia’s previous suit in October, in which it accused Apple of infringing upon 10 of Nokia’s mobile phone technology patents. 

Those technology 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.

Ilkka Rahnasto, deputy head of Nokia’s legal department, said at the time that Apple had attempted to "get a free ride on the back of Nokia’s innovation.”

Apple countersued in the same Delaware federal court where Nokia had filed its earlier complaint.  

Apple accused Nokia of trying to revive its slumping market position by gaining access to iPhone technology, and for charging "exorbitant" fees for patented technology that is standard within the industry.

According to court documents, Apple denied infringing upon Nokia’s patents, and said the patents asserted by Nokia in its previous suit were not vital for technology standards used in mobile phones.  

"Nokia’s demands appear to be driven by declines in its own mobile phone business," said the Cupertino, CA-based iPhone maker in its 79-page counterclaim.

"Nokia has been attempting to use its allegedly standards-essential patents to help regain what Nokia has lost in the marketplace."

In its complaint, Apple said Nokia had agreed to let its patented technology be incorporated into industry standards, and now has a "hold-up" power that it "abusively seeks to wield.”

If the technology is essential to industry standards, then Nokia is violating a commitment to license it on "fair, reasonable, and non-discriminatory terms," Apple said.

Nokia is demanding lucrative royalties, and calling for "grantbacks" that permit the company to use Apple technology, Apple said in legal documents.

However, Nokia is already employing iPhone technology without permission, Apple said.

"This attempt by Nokia to leverage patents previously pledged to industry standards is an effort to free ride on the commercial success of Apple’s innovative iPhone while avoiding liability for copying the iPhone and infringing Apple’s patents," said Apple in its filing.

Apple is seeking unspecified financial damages and the dismissal of Nokia’s suit. 

Nokia told the AFP news agency that it is reviewing Apple’s claim "and will respond in due course."

The dispute between Apple and Nokia could potentially involve hundreds of millions of dollars in annual royalties, and take years to resolve.

Analysts say the battle reflects a shifting balance of power in the industry as cellphones transition into handheld computers that can do everything from play video games to surf the Web.

Nokia recorded its first quarterly loss in ten years in October, something analysts attributed in part to the growing popularity of the iPhone and Research in Motion’s Blackberry. 

Meanwhile, Apple posted record quarterly sales of 7.4 million iPhones in October, and overtook Nokia last quarter as the mobile phone maker generating the highest total operating profit.

"History is littered with industry incumbents being surprised by newcomers since established players often fail to deliver customer value beyond the basic utility of their initial products," Steven Nathasingh, CEO of researcher Vaxa Inc., told Reuters.

"Apple has bedazzled Nokia and others like Sony by redefining all things mobile and making it generationally stylish. A combination that is hard to beat.”

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