Nokia claims Qualcomm patents ‘exhausted’ in Europe: Qualcomm says nonsense, it’s all about cross-licensing negotiations

As the April 9 deadline draws near for renewing an existing cross-licensing agreement between Nokia Corp. and Qualcomm Inc., the Finnish handset maker has filed complaints in two European courts asking that the courts find certain Qualcomm patents “exhausted.”
Such a finding would free Nokia from the need to pay Qualcomm royalties on certain products sold in Europe, according to Nokia.
Bill Plummer, Nokia’s vice president for external affairs in North America, said that ongoing negotiations over the cross-licensing agreement “stand alone” and apart from the new filings in Europe. That was disputed by Lou Lupin, general counsel for Qualcomm.
“Let’s be candid,” Lupin said. “In some sense, all the litigation (between the two companies) so far relates to the ongoing negotiations.”
The continued legal sparring and war of words led at least one analyst-Maynard Um at UBS-to call for more information on Nokia’s complaints. Qualcomm and, presumably, journalists and analysts, have not yet seen Nokia’s complaints. Um wrote in a note to investors last week that he viewed the latest action as an attempt at leverage in the cross-licensing negotiations.
Lupin said it would be fair to characterize the cross-licensing agreement as by far the biggest issue between the two companies, and that individual legal actions between the companies reflected attempts to get either strategic leverage in the overall negotiations or to address specific issues in the negotiations.
Nokia filed its complaints in the Regional Court of Mannheim in Germany and in the Hague District Court in The Netherlands, jurisdictions experienced in the concept of “exhaustion” in European Union law, the company said last week. If the courts decide Nokia’s claim is valid, Nokia would not pay Qualcomm royalties on certain handsets it sells that contain Texas Instruments Inc. chips governed by a patent portfolio license between TI and Qualcomm signed in 2000.
Nokia’s press release on the matter cited its nearly $40 billion in investments in research and development in GSM and W-CDMA technologies in 11,000 patent families, a reflection of arguments it has made in dealing with Qualcomm on the cross-licensing issue. Yet, according to Plummer, the two matters are not directly related.
“We’ve asked for a declaration that, once intellectual property has been licensed and royalties extracted and incorporated into a chipset, that it would be illegal according to European Union law for additional royalties to be extracted yet again, once that chipset is implemented in a downstream product such as a mobile phone,” Plummer said.
“Obviously I can’t relate it to ongoing negotiations per se, but it covers similar topics,” Plummer added. “It’s really about a practice that’s illegal according to European law, and we’re asking the courts for a declaration to that effect. The cross-licensing negotiations stand alone. We are looking forward to achieving a mutually agreeable solution that takes into account the realities of each party’s intellectual portfolio.”
Apprised of Plummer’s statements, Lupin offered a response.
The fundamental principles of “exhaustion” also exist in U.S. law, according to Lupin. “Sometimes they take positions that seem to be at odds with how they’re behaving,” Lupin said. “That appears to be the case here.”