Last week, mobile phone maker Nokia announced that it had filed a suit in US Federal District Court in Delaware, alleging that ten aspects of iPhones shipped since 2007 infringed on Nokia's intellectual property.
The patents in question, according to the company's press release, cover wireless data, speech coding, security and encryption and are infringed by all Apple iPhone models shipped since the iPhone was first introduced.
Neil Mawston at Strategy Analytics told Reuters, Apple could have to pay Nokia anything between $200 million and $1 billion for patents used in 34 million iPhones shipped so far. Apple sold 7.4 million iPhones, in the last quarter, for an average sales price of $566, according to the analysts calculations.
However, Charles King, an analyst with Pund-IT, told eWEEK that an estimate worked out by The New York Times seemed more reasonable and likely with Nokia receiving a 2 per cent royalty, or approximately $12, for each iPhone Apple has sold, around $400 million, based on 34 million iPhone smartphones.
"It would still be a nice piece of change for Nokia," King told eWEEK. "According to Nokia, they've been telling Apple for months now that they owe them money for the patents they're using, and Apple has refused to pay them anything. From Nokia's point of view, they've tried the carrot and to be nice guys, and now it's time to bring out the stick."
In a statement last week, Nokia highlighted the costs of developing those patents. "During the last two decades, Nokia has invested approximately EUR 40 billion in research and development and built one of the wireless industry's strongest and broadest IPR portfolios, with over 10,000 patent families. Nokia is a world leader in the development of GSM technologies and its evolution to UMTS / 3G WCDMA as well as wireless LAN, which is also demonstrated by Nokia's strong patent position in these technologies."
Meanwhile, Ben Wood, research director at CCS Insight told Reuters, Apple may have a difficult case to defend, espicially as a late entrant in the mobile phone market. "It is almost inconceivable that someone can produce a mobile phone without using Nokia patented technologies."
"Intellectual property licensing costs create a significant barrier for late entrants into the mobile phone space. As a result they become net payers to the big established players such as Ericsson, Motorola, Nokia and Qualcomm."
The timing of Nokia's suit has not gone unnoticed. Between July-September 2009 Nokia saw its smartphone market share drop to 35 per cent from 41 per cent in the previous quarter, while Apple and Research In Motion, the maker of the BlackBerry, saw rises in market share.
"The smart phone market share issue is a factor relative to the timing of this suit. This has to create concern for Nokia," Steven Nathasingh, managing director of research firm Vax told Reuters.
Nokia is likely searching for new revenue with the ligation. Neil Mawston told The New York Times. "Where there is a hit, there is usually a writ. The intellectual property rights wars are ramping up in the handset industry now."
Hardly flushed with cash, last year, Nokia paid $2.55 billion to US mobile chipmaker Qualcomm as part of a 15-year patent agreement.
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