Nokia to sue Apple iPhone for patent infringement, up to $12 per unit sold

Posted on 23-10-2009

The 5800 XpressMusic failed to make a dent. The N97 has drawn yawns from most users, and laughs from iPhone owners. The upcoming N900 looks promising, but initial reviews have it pegged as nowhere near Apple’s high-selling handset. So here’s Nokia’s latest attempt at an iPhone-killer: a court order!

The Finnish mobile phone giant seems to believe that when you can’t beat ’em, the best option is to sue ’em. In a complaint filed at the Federal District Court in Delaware, USA, the company is alleging that Apple's iPhone infringes 10 Nokia patents for GSM, UMTS and wireless LAN (WLAN) standards.

The patents comprise technologies that are “fundamental” to making phones, and have been infringed by Apple since it started making the iPhone in 2007, Nokia claims.

The world’s largest handset manufacturer may be in the right, though. Nokia has already successfully entered into license agreements including these patents with approximately 40 companies, including virtually all the leading mobile device 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."

Although the amount of money involved hasn’t been disclosed, CNET News quoted Apple analyst Gene Munster as saying that Nokia would be looking for a royalty payment close to 1-2 per cent ($6-$12) of every iPhone sold. With 34 million iPhones sold to date, that comes to about $204-$408 million in damages. Ouch!

Most importantly, Apple seems to be on the back foot in this one. "Invalidating 10 patents is a lot, that's like running the Boston Marathon. It's really hard to do. You might get one, two or even five. But 10 is a lot," said Jason Schultz, director of the Samuelson Law, Technology & Public Policy Clinic at the UC Berkeley School of Law.

Given Nokia’s recent losses, they wouldn’t mind the extra cash, surely. How do you like them apples?

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