Qualcomm files two patent suits against Nokia
Qualcomm Inc. said Tuesday that it had filed two new patent infringement lawsuits against Nokia, the latest punch in an increasingly bitter fight over mobile technology licenses.
The suits dim hopes of the pair reaching an agreement before the expiration of their technology license contract Monday. Qualcomm has often said it was unlikely to reach a pact with the world’s biggest mobile phone maker in time, but some investors had hoped this would happen.
“There’s no hope ... these guys are going to settle” before Monday, Charter Equity Research analyst Ed Snyder said. “Qualcomm filed that suit today because it’s trying to increase pressure on Nokia as they approach the April 9 deadline.”
Unless they reach an agreement, Nokia is expected to stop paying licensing fees to Qualcomm from the expiry date. If this happens, Qualcomm has said it could see its quarterly earnings reduced by 4 cents to 6 cents a share.
If Nokia prevails in its bid to lower royalty fees, that may have wider repercussions for Qualcomm, which derives most of its profit from 140 royalty and license agreements with telecom companies around the world.
“The royalty agreement they reach with Nokia could have spill-over impact on the agreements they have with their other customers,” said Prudential analyst Inder Singh, who estimates that Qualcomm gets 4.5% of the price of all applicable Nokia handsets under their existing agreement.
Snyder said, “There’s only downside for Qualcomm. The best-case scenario is that they can keep the status quo.” He added, “I don’t see any alternatives that are palatable.”
San Diego-based Qualcomm, the dominant supplier of chips for mobile phones based on CDMA (code division multiple access) technology, widely used in the United States, said the patents in the latest U.S. lawsuits related to wireless application downloading and speech-coding technology used in some phones.
It said it wanted an injunction against sales of handsets and damages related to those already sold based on wireless technologies GSM, GPRS and EDGE.
Qualcomm has already filed similar cases against Nokia in Britain, France, Germany, Italy and China.
Finland’s Nokia said the latest action appeared to be part of a pattern of serial litigation by Qualcomm.
“We believe this suit is also without merit. Nokia will actively defend itself to ensure the rights of the company are protected,” a spokeswoman said.
Qualcomm shares closed up 63 cents at $43.71; Nokia’s U.S. shares closed up 26 cents at $22.96.
