Nokia blasts Qualcomm at ITC, Qualcomm reworks legal strategy

Nokia Corp. fired yet another salvo at Qualcomm Inc., filing a complaint with the U.S. International Trade Commission alleging Qualcomm is infringing on five of its patents. The news serves to widen the gulf between the two companies as each seeks to gain leverage against the other in bitter cross-licensing negotiations for patents.
In its complaint, Nokia said Qualcomm products infringe on Nokia patents that improve the performance and efficiency of cellphones, as well as enable lower manufacturing costs, smaller product size and increased battery life. Nokia, the world’s largest cellphone maker, is asking for a ban on Qualcomm chips in the United States.
Qualcomm declined to comment on the complaint.
The issue is just the latest in a long line of legal actions between Qualcomm and Nokia; indeed, Qualcomm filed its own patent-infringement charge against Nokia with the ITC, and the issue is scheduled to go to trial next month.
At the heart of the battle is a cross-licensing deal between the two wireless giants that ended earlier this year. Both companies are now attempting to improve the positioning of their patents in hopes of gaining a more favorable licensing deal with the other.
And, at least according to one analyst, the issue could take years to play out. In a recent note to investors, CIBC World Markets analyst Ittai Kidron wrote that Qualcomm CEO Paul Jacobs expects a final deal with Nokia to be “one, two or more years out, not months.”
CIBC makes a market in Qualcomm securities.
Interestingly, Kidron also wrote that Qualcomm’s management thinks “a change in strategy is needed” to untangle Qualcomm’s legal quagmire. While the chipmaker struggles with a Nokia cross-licensing agreement, it must also face serious legal challenges from rival chipmaker Broadcom Corp., which alleges Qualcomm has infringed on its patents. Broadcom has racked up a number of legal victories over Qualcomm, including a ban on Qualcomm products by the ITC.
“Jacobs admitted mistakes were made in handling the Broadcom side of the legal front,” Kidron wrote following a Qualcomm investor meeting hosted by CIBC. “Simply put, he suggested Qualcomm was too focused on Nokia, used too much of outside counsel versus in-house, and just didn’t have the right process and controls in place to manage the claims. Although a bit late in the game, steps are being taken to correct these mistakes.”
Specifically, Kidron said Qualcomm plans to be more aggressive-rather than reactive-in its actions, and that its top management will more closely oversee both the legal and the technical aspects of the company’s various cases.
Kidron wrote that Qualcomm is keen to stand strong against Broadcom and Nokia on the patent-licensing front. If Qualcomm faltered and gave either a more favorable licensing deal, the rest of the company’s patent licensees-including heavyweights Samsung Electronics Co. Ltd. and LG Electronics Co. Ltd.-likely would also push for cheaper licensing deals on Qualcomm patents, thereby significantly eroding Qualcomm’s licensing revenues.