Nokia keeps selling despite patent dispute

An end to the heated patent licensing dispute between Qualcomm Inc. and Nokia Corp. is nowhere in sight, with both companies still far apart in their positions to renew terms of a licensing pact, which expired Tuesday.

Although Nokia last week offered Qualcomm $20 million to license some patents related to 3G (third-generation) mobile phones, in particular WCDMA (Wideband Code Division Multiple Access) technology, the U.S. company has yet to accept the offer.

"We are currently looking at the legal implications of accepting or rejecting that payment and the five pages of terms and conditions that Nokia provided," said Richard Tinkler, a spokesman for Qualcomm in Europe. "If Nokia continues to sell and ship products using our patents, we will consider that the company has elected to extend its current licensing agreement and will be obligated to make royalty payments at terms established within that agreement."

Nokia believes it has offered Qualcomm an acceptable amount to cover the use of its patents until the two companies reach an agreement.

"We don't know how many products we'll sell in the second quarter but we have made an offer that we see as fair and reasonable," said company spokeswoman Anne Eckert.

Until a final agreement is reached, Eckert said it's "business as usual."

"We're in cross-licensing negotiations with the intention of reaching mutually acceptable terms on a timely basis," she said. "It's not unusual for big companies to take some time to agree on cross-licensing payments."

The question is how long. The two companies are still at near opposite ends of the negotiating table.

"You can't have your technology included in a standard and then say you'll charge whatever you want," Eckert said. "This is an issue where you have to license on fair, reasonable and nondiscriminatory terms."

Qualcomm accuses Nokia of wanting to dictate prices.

"We stand by our position that Nokia has no more a right to set a price than the average consumer who can't just walk into a store, take a product off the shelf and walk out paying only a fraction of the established price," Tinkler said.

If the two companies fail to agree, their dispute could open the floodgate to lawsuits around the world, Eckert warns.

"There is no global court to handle a patent licensing issue like this," she said. "It would need to be decided court by court, country by country, depending on which patents are regulated in each country."

A global tour of courts could, in turn, generate huge litigation costs, which could offset the money Nokia hopes to save through lower royalty fees and eat into Qualcomm's margins as well.

Whether other handset manufacturers using Qualcomm's patents plan to pursue the same course as Nokia remains to be seen.

"I'm not aware of any companies planning anything," Tinkler said, but acknowledged that Nokia is the first big customer to have a license expire, with many other big contracts set to expire in 2011.

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