Nokia Corp.'s patent licensing deal with Trimble Navigation Ltd. this week could give the phone maker an important boost in an ongoing dispute with CDMA developer Qualcomm Inc.
The deal gives Nokia a license for 700 Trimble technologies for delivering location-based services, as well as exclusive rights to sublicense them to other companies in the wireless industry. That means any company that wants to license Trimble's patents must now do so through Nokia.
Nokia officials stopped short of calling the deal just what it needs to end its acrimonious renegotiation talks with Qualcomm. But they acknowledged that it will strengthen Nokia's hand in licensing talks with all wireless companies that include GPS (Global Positioning Systems) capabilities in their products.
"It will improve our negotiating position," said Ulla James, director of intellectual property rights strategic marketing for Nokia.
Trimble has one of the biggest portfolios of patents for location-based technologies, and any company that offers such capabilities will now need to talk to Nokia, she said.
Qualcomm integrates GPS capabilities in many of its chipsets, including its gpsOne product. The company has shipped tens of millions of such chipsets in the past few years, said Nitesh Patel, a senior analyst at Strategy Analytics Inc.
"Given that Nokia can sublicense to whoever it wants to and on whatever terms it wishes to, it has a strong bargaining position with Qualcomm with respect to GPS," Patel wrote in an e-mail.
He cautioned that Qualcomm might already have a long-term contract with Trimble that could supersede the arrangement between Nokia and Trimble.
Qualcomm declined requests for comment, and Nokia would not discuss how the deal might affect its negotiations with Qualcomm specifically.
Nokia and Qualcomm are engaged in a bitter renegotiation of a patent licensing agreement that ends in April 2007. The companies license a variety of patents from each other relating to mobile phone standards. Qualcomm is well-known for developing the CDMA (Code Division Multiple Access) standard and Nokia patents contribute to the WCDMA (Wideband CDMA) and other standards. Qualcomm has launched several lawsuits against Nokia for alleged patent infringement and Nokia, along with five other mobile vendors, has filed an anticompetitive complaint against Qualcomm with the European Commission.
Nokia played down the significance of the April deadline. If the two sides don't reach agreement by then, they will both be able to continue selling their respective products in any case, James said. It is "normal practice" for two companies in a renegotiation process to continue selling products even if the contract expires, with an eye to settling payments once a new contract is agreed to, she said.
Nevertheless, a stronger patent portfolio of its own could only help Nokia in its negotiations. In some of its lawsuits against Nokia, Qualcomm has asked the court to pay for Nokia's alleged patent infringement on phones that it has already sold.
Nokia's agreement with Trimble marks a new way of thinking at the Finnish handset maker, which now views intellectual property more as an investment, said James. That's a turnaround from the 1980s, when the company didn't believe in the long-term value of patents and advised companies not to apply for them, James said.
Today, Nokia contributes 25 percent of the patents that make up the GSM (Global System for Mobile Communications) standard and 28 percent of WCDMA patents, James said. It also holds 130 essential patents for CDMA. Despite announcing an exit from the CDMA market, Nokia intends to hold onto those patents as a revenue generator, she said.
Nokia also believes that it has around 25 percent of essential patents for WiMax, the emerging broadband wireless standard. Qualcomm recently began asking WiMax vendors to license patents relevant to WiMax that it acquired when it bought Flarion Technologies Inc. last year.
(James Niccolai in Paris contributed to this report.)