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Electronics Production | March 29, 2011

Escalation: Nokia files new ITC complaint against Apple

"Many observers and analysts will now try to form an opinion on whether this latest action by Nokia is a sign of strength or weakness. I have thought about this and concluded that there is a significant degree of frustration shining through Nokia's announcement because things take so long, but more than anything else, Nokia is sending out a strong and unambiguous message that at the end of this epic battle Apple is going to have to send royalty checks to Finland."
Two days ago I just reported on an ITC judge's "final initial determination" (not a definitive ruling) to dismiss a complaint filed by Nokia against Apple over 7 patents back in December 2009. I also updated my battelines diagram. Now the next update is already due: Nokia just filed another ITC complaint against Apple -- and a mirror complaint with the US District Court for the District of Delaware.

At this stage, none of the complaints has been made public.For now, the only information available is Nokia's press release. It's the most aggressive one Nokia has issued in this dispute, and probably the most aggressive one since its epic battle with Qualcomm.

Seven more patents asserted, virtually all Apple products accused

In its headline, Nokia "[a]lleges Apple infringes additional Nokia patents in virtually all products". The first paragraph of the announcement describes that product range as "virtually all of its mobile phones, portable music players, tablets and computers." According to Nokia, the seven patents-in-suit relate to inventions "in the areas of multi-tasking operating systems, data synchronization, positioning, call quality and the use of Bluetooth accessories", and Paul Mellin, Nokia's intellectual property VP, stresses Nokia's role as a pioneer by stating that "many [of those patents were] filed more than 10 years before Apple made its first iPhone."

It's actually not new for Nokia to attack a host of Apple product lines simultaneously.

Figuring out Nokia's motivation to do this

It's not a coincidence that Nokia takes this step so shortly after Friday's unfavorable determination. Preparing such a complaint always takes time, but Nokia probably knew it had an unfavorable determination coming, and Nokia must have been searching for some time for patents that it can assert against Apple. If you already know which patents you wish to assert against which products and have the claim charts (tables describing the language of the patent claims and the relevant characteristics of the allegedly infringing products) in place, you can also put together a complaint within a few days.

Many observers and analysts will now try to form an opinion on whether this latest action by Nokia is a sign of strength or weakness. I have thought about this and concluded that there is a significant degree of frustration shining through Nokia's announcement because things take so long, but more than anything else, Nokia is sending out a strong and unambiguous message that at the end of this epic battle Apple is going to have to send royalty checks to Finland.

Nokia's patent portfolio is roughly five times larger than Apple's. They both operate in the same industry resulting from the convergence of computing and communications technologies. Theoretically one "killer patent" can be stronger than a thousand other patents, and there are indeed significant quality differences between the patent portfolios of major high tech companies. But it's hard to imagine that Nokia's patents are, on average, so much weaker than Apple's that the outcome could be anything else than Apple being required to pay.

We haven't yet seen the end of this. If Nokia wants to, it can probably bring many more patents into position against Apple. I'm sure Apple also has the potential to make some more allegations, but at some point Apple will run out of patents that Nokia needs.

Trying to understand both parties' perspectives

I can very well understand Apple's perspective. Apple looks at the innovative breakthroughs it achieved in recent years -- a period during which Nokia was poorly managed. But Apple has always and especially recently been a proponent of a strong patent system, and you just can't have your cake and eat it. Those patents are valid for up to 20 years, a long time in this industry. It's the name of the game that patents give a pioneer like Nokia a strategic advantage over a late entrant like Apple.

There are no signs of Nokia trying to drive Apple out of business with its patents: between two players of that kind, destruction would be mutually assured. The question simply comes down to who will be the net payer. Nokia appears to be very convinced that it brings the more powerful patent portfolio to the table.

Strategically, Nokia would have a lot to gain from requiring Apple to take a royalty-bearing license. As I mentioned in my previous post, Nokia's management plans to monetize the company's patent portfolio more proactively now. Even if Nokia couldn't charge Apple royalties, it could probably still find many others in the industry who are weaker than Apple and have to pay. But if Nokia can show that it has the strength and the determination to bring Apple to its knees, most other device makers will think very, very hard before ever picking a fight with those Finns.
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Author: Florian Mueller
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January 17 2019 2:20 pm V11.11.0-2