Qualcomm Inc. sent yet another shot across Nokia Corp.’s bow, filing a lawsuit last week in the United Kingdom against the Finnish handset maker for alleged violations of two of Qualcomm’s GSM-related patents focusing on GPRS/EDGE handsets. In typical Nordic fashion, Nokia shrugged off the allegations.
The suit seeks an injunction against further handset sales relating to the two patents and damages on phones already sold. According to investment bank UBS, the suit is similar to one Qualcomm filed last November in the United States against Nokia. For its part, Nokia last year joined other wireless companies in alleging that Qualcomm is participating in anti-competitive pricing on its royalty rates for CDMA-related chipsets.
Nokia downplayed the latest tort.
“Nokia is not surprised that Qualcomm has once again chosen to litigate,” the company said in a statement. “Nokia has yet to receive a copy of the complaint or analyze the details: therefore, Nokia cannot comment on the substantive aspects of the claims. Based on our current information, Nokia does not believe that Qualcomm is entitled to an injunction.”
The handset manufacturer added that it “has declared 223 patents as essential to the GSM standard where the total number of declared essential patents is close to 800 making Nokia a world leader in the development of GSM/GPRS/EDGE.”
As a final stab, Nokia opined that “Qualcomm’s positioning GSM is clearly inferior to Nokia’s.”
Since its investor day in New York on May 4, Qualcomm has been declining to comment on the progress of its ongoing negotiations with Nokia over the renewal of a major agreement on mutual intellectual property rights-due to expire in April 2007. At its New York meeting, Qualcomm executives spent a good deal of time portraying the strength of the company’s negotiating position, and also expressing optimism that an agreement will be reached. For its part, Nokia has remained mum on specifics relating to the renegotiations.
UBS analyst Maynard Um wrote that Qualcomm’s latest court action represents tactical maneuvering by Qualcomm in the renegotiation process. Um wrote that the legal salvos do not bode well for the rapid resolution of the two parties’ renegotiations on mutual IPR.
In the larger competitive picture, Um suggested that Nokia faces several risks to its profitability and industry-leading market share. Continued weakness of the U.S. dollar relative to the Euro could continue to dampen Nokia’s sales, the handset vendor’s average selling prices could drop further as Nokia sets low prices on its handsets to increase market share. Further, competitors may introduce new products that grab the spotlight from Nokia.
