When cell phones first came on the market, Finnish company Nokia was one of the world’s largest cellphone manufacturers. Nokia branded phones were extremely popular but, as times have changed, the demand for Nokia products has declined significantly.
Nokia has claimed that the cell phone industry would not be what it is today without the help of billions of dollars that they put into research and development. Apple has paid Nokia licensing royalty fees over the past five years based on Fair, Reasonable and Non-Discriminatory (FRAND) terms. An annual report shows Nokia profited more than $1 billion from licensing their patents.
Last month Nokia sued Apple in the U.S. District Court for the Eastern District of Texas as well as courts in Germany for patent infringement. Nokia has since broadened the reach of their litigation to courts in multiple European and Asian countries and filed a lawsuit with the U.S. International Trade Commission (ITC). Nokia alleged that Apple infringed upon 32 technology patents that covered antennas, software, video coding and other functions. Ilkka Rahnasto, Nokia’s head of patent business, said in a statement that “Nokia has created or contributed to many of the fundamental technologies used in today’s mobile devices, including Apple products. After several years of negotiations trying to reach agreement to cover Apple’s use of these patents, we are now taking action to defend our rights.” Although Nokia is no longer one of the world’s largest cellphone manufacturers, many of today’s cellphones and tablets use the patented technology covered in Nokia’s patents.
While some of Nokia’s claims may have merit, others may be more difficult to prove. For example, Nokia recently accused Apple of patent infringement on an electronic device case that includes a hole for a camera lens in the back and room for a battery beneath the display, a patent Nokia received two months prior to the accusation.
Last month Apple filed a lawsuit in the U.S. District Court for the Northern District of California against Acacia Research and Conversant Intellectual Property Management, patent license companies Apple considers to have engaged in anticompetitive behavior with Nokia. Apple argues that some patents were excluded from the royalty agreement between Apple and Nokia and were transferred to these companies to “extract and extort exorbitant revenues unfairly”. In the lawsuit Apple alleged the companies “conspired with Nokia to use unfair and anticompetitive patent assertions to improperly tax the innovations of cell phone makers.”
It should be noted that any Nokia patents transferred to Acacia Research and Conversant Intellectual Property Management may not be bound by the FRAND terms. Those companies are considered patent assertion entities and are generally not held to FRAND terms and can demand fees higher than the originally agreed upon amount.
In a statement given to USA TODAY Apple said: “Unfortunately, Nokia has refused to license their patents on a fair basis and is now using the tactics of a patent troll to attempt to extort money from Apple by applying a royalty rate to Apple’s own inventions they had nothing to do with. We are standing up for inventors everywhere by fighting this flagrant anticompetitive practice.” Apple asked the court to award damages and rule that Nokia breached its contract.