Troubled Nokia targets Apple

Nokia’s suit follows its announcement of a third quarter loss of 426 million Euros and a 20% year-on-year slump in sales. By comparison Apple recently reported its most profitable quarter ever, driven in part by iPhone sales.

"This action is not about stopping or interrupting Apple's commercial mobile phone business; it is about appropriate compensation for the use of our IP, ensuring Apple is competing with others in the industry on a level playing field," said a Nokia spokesman.

Nokia’s suit follows its announcement of a third quarter loss of 426 million Euros and a 20% year-on-year slump in sales. By comparison Apple recently reported its most profitable quarter ever, driven in part by iPhone sales.

Nokia said Apple had been ‘trying to get a free ride on the back of Nokia’s innovation. More specifically, the Finnish company said that Apple had infringed on Nokia patents relating to securiy, encryption, speech coding and wireless data and that the infringements occurred in every single iPhone Apple has sold since its launch in 2007.

Nokia does not want to stop Apple from making the iPhone in its current incarnation, it just wants compensation, which has been estimated to be as much as $12 per iPhone sold by industry analyst, Gene Munster of Piper Jaffray.

Industry analysts have variously predicted that Apple could pay Nokia between $200 million and $1 billion if it loses a lawsuit.

Nokia said it had taken the decision to sue Apple after a breakdown in negotiations between the two companies.

Apple appears to have no intention of backing down. In a filing with the US Securities and Exchange Commision (SEC) the iPhone maker said it intended to ‘vigorously’ fight Nokia’s legal action, which is in the US.

Such fights between mobile phone companies are not unusual and are, according to industry analysts likely to become more common as handsets incorporate ever more features and technology.

InterDigital, a US mobile telephony research and development company licenses many of its technologies to handset makers and network operators, however it recently lost a US court case it took against against Nokia alleging patent infringement.

InterDigital CEO, Bill Merritt predicted that the Nokia law suit with Apple will last at least a year, and maybe two or three if Apple countersues, which it may do, as it also owns a large portolio of technology patents relating to mobile phones.

Nokia and Qualcomm fought a legal battle over technology patents from 2005 to 2008 in the US.

Apple already pays licensing royalties to Ericsson and Qualcomm, so the company is not philosophically opposed to paying technological rivals. Merritt said that Apple was likely baulking at paying a license fee to Nokia calculated as a percentage of the iPhone’s selling price, which is much higher the typical smartphone.

Nokia’s director of communications, North America described the company’s suit against Apple as a ‘last resort.’