Nokia and Apple have only fired the opening shots of their mobile phone patent battle, but considering their legal history it should be a fierce and long war. Both are experienced and hard-nosed litigants with deep pockets. As aggressive rivals in the smartphone market, neither Apple nor Nokia will pull any punches in court – and their dispute could take years before settlement, say analysts, lawyers and companies that have faced off against them.
Nokia sued Apple in October, saying the iPhone maker had infringed on 10 patents covering wireless data, speech coding, security and encryption. Apple countersued on Friday, accusing the Finnish company of infringing 13 patents. Lyle Vander Schaaf, an international trade attorney with Bryan Cave LLP in Washington, predicted a “dogged and tireless defense by Apple.” “They in particular take these accusations of infringement very seriously, I think they almost take it personal,” he said. Apple has enlisted the services of William Lee, co-managing partner of Wilmer Cutler Pickering Hale and Dorr, a highly regarded intellectual property attorney. “Apple picked the best they can get and he (Lee) obviously has the experience; I certainly think Apple wants to make it clear it's going to come out swinging,” said Alfred Zaher, a patent lawyer with Blank Rome LLP in Philadelphia. Lee was counsel to chipmaker Broadcom Corp during its lengthy legal fight against Qualcomm Inc, which ended this year with Qualcomm agreeing to pay $891 million to Broadcom. Lee has twice been named one of the 100 most influential lawyers in America by The National Law Journal. As for Nokia, it began to focus on its patent portfolio after losing a legal battle to Motorola Inc in 1989.
In a case similar to the latest dispute, Motorola had sued Nokia – then a mobile newcomer – for breaching its patents. Nokia paid more than $10 million to settle the case. About 40 companies have entered into license agreements with the Finnish phone maker – including virtually all the leading handset vendors except Apple. Nokia is not shy in using its scale to squeeze smaller companies, said executives who have faced the Helsinki-based company in court. It took three years before Nokia in 2008 settled the largest legal battle in the mobile world, against Qualcomm, after more than a dozen cases across three continents. “It is possible that Nokia may be angling for some IPR (intellectual property rights) concessions from Apple, perhaps something to do with the multi-touch patents Apple holds,” said MKM Partners analyst Tero Kuittinen.
Nokia is the world's biggest mobile phone maker by volume, but Apple – which entered the market less than three years ago – has quickly become a major player in smartphones, which offer games, email, web-surfing and other multimedia features. In its complaint against Apple, Nokia said it was seeking compensation for Apple's use of the patents and accused the iPhone maker of taking a “free ride” on Nokia's investments. Anne-Liisa Palmu-Joronen, who worked in Nokia's legal department from 1980s until a few years ago, wrote in her memoirs: “IPR lawyers understand the real nature of patent lawsuits – it's about tactical war on the marketplace.” The case could drag on for years in district court, as the two companies seek the upper hand in settlement talks.
In its complaint, Nokia said Apple has rejected its compensation terms for use of the patents. It did not specify those terms. Apple described, in its filing on Friday, negotiations that date from 2007 – including Nokia's royalty offers, which at one point rose three-fold, and Nokia's demand to be able to choose which Apple nonstandard patents it would like to license. While it is a relatively new entrant to the phone market, Apple is no stranger to patent litigation. In its annual report, Apple said it is defending more than 47 patent infringement cases, of which 27 were filed in fiscal 2009. The company has over $30 billion in cash and securities – plenty of financial resources for a lengthy court battle. Nokia Chief Executive Olli-Pekka Kallasvuo, who started at the company as a lawyer, said last week Nokia and Apple were still on “discussion terms.” Morris, Nichols, Arsht & Tunnell and Alston & Bird are lawyers for Nokia. Potter Anderson & Corroon and Wilmer Hale are lawyers for Apple.