Yup, you read that right. The biggest handset maker in the world and the maker of the most popular handset are heading to what could be a long legal battle.
Nokia is suing Apple because the latter has refused to license 10 patents and according to a statement released by the Finnish phone maker, all iPhone models (yup, that means even the original iPhone) is infringing.
“The basic principle in the mobile industry is that those companies who contribute in technology development to establish standards create intellectual property, which others then need to compensate for,” Ilkka Rahnasto, vice president, legal and intellectual property at Nokia said. “Apple is also expected to follow this principle. By refusing to agree to appropriate terms for Nokia’s intellectual property, Apple is attempting to get a free ride on the back of Nokia’s innovation.”
According to Nokia, the company has spent over $60 billion on R&D related to wireless technology. The patents that Apple allegedly violated include patents on wireless data, speech coding, security and encryption. It also said that for any phone to be able to run on a GSM, 3G, or Wi-Fi network, it would have to license one of its patents – an action that Apple did not make.
So what will happen if Nokia wins in court?
According to Apple analyst Gene Munster, Nokia can extract a royalty payment of 1 to 2 percent for every iPhone EVER sold (basically that $6 to $12 per phone or $204 to $408 for all iPhones). What’s worse for Apple is that if the court found that a “willful infringement” was committed by the company, they will have to pay Nokia three times the amount of whatever the judgment won.
And what does that leave Apple? Either they settle this out of court, or they can invalidate Nokia’s patents. According to Jason Schultz, director of the Samuelson Law, Technology & Public Policy Clinic at the UC Berkeley School of Law however, the latter could be much more difficult to do.
“Invalidating 10 patents is a lot, that’s like running the Boston Marathon. It’s really hard to do. You might get one, two or even five,” Shultz said. “But 10 is a lot.”