Apple (AAPL) faces the possibility of having to pay Nokia (NOK) up to $1 billion for the technologies used in iPhones sold so far if it loses a lawsuit brought by Nokia.
Nokia claims that there are 40 other tech companies that are paying for the legally-licensed use of these 10 patents and it wants Apple to do the same.
The iPhone, which was introduced by Apple in 2007, uses two industry standards for wireless communications, G.S.M. and U.M.T.S., that Nokia developed as part of a consortium of global telecommunications companies. Nokia said it had repeatedly asked Apple to license its patents related to these standards and that Apple had refused.
Nokia had been trying to negotiate lower royalty payments to Qualcomm, and Piper Jaffray analyst Gene Munster thinks this is that heart of the matter between Nokia and Apple. “We believe that Nokia is not seeking an injunction; rather, we believe that the company has been in talks with Apple concerning a patent royalty payment for over a year,” Munster said in a note to investors. “With today’s announcement, it appears that the companies have not come to a resolution and Nokia is attempting to hasten the process.
In a statement, Nokia said Apple has refused to pay for use of intellectual property developed by Nokia that lets handsets connect to third-generation, or 3G, wireless networks, as well as to wireless local area networks. “Apple is attempting to get a free ride on the back of Nokia’s innovation,” Ilkka Rahnasto, Nokia vice-president for legal and intellectual property, said in the statement. An Apple representative declined to comment.
Neil Mawston at Strategy Analytics said Apple could have to pay Nokia anything between $200 million and $1 billion for patents used in 34 million iPhones shipped so far.
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