Finnish telecommunications giant Nokia Corp. has recently launched a preemptive legal battle against Qualcomm Inc. by filing law suits against the U.S. chipset manufacturer in Germany and the Netherlands. The company while filing complaints at two European law courts contended that Qualcomm’s European patents has been exhausted on products in the European market. The legal course has been adopted by the world’s largest phone maker by volume with a view to restrict Qualcomm from enforcing patents pertaining to some Nokia phones sold in the European Union.
The preemptive move is the latest in an escalating rivalry between the two rivals. Nokia is seeking to end or at least slacken Qualcomm’s hold on patents for CDMA, the digital-wireless technology that is becoming the standard in the marketplace. San Diego-based Qualcomm has in the past alleged that Nokia is trying to damage its business model, which relies in a large part on royalties generated from its intellectual property. However, Qualcomm has not issued any official statement over the recent action taken by Nokia.
In fact, Nokia and other cellphone companies want to lower the royalties they are paying to Qualcomm for technology used in third-generation phones. They contend that Qualcomm does not have sufficient intellectual property rights covering the newest technology. Nokia’s contention is that Qualcomm’s royalty rates, somewhere close to 5 percent, are too high. Whereas Qualcomm argues that its wireless technologies, already used in some 25 percent of the world’s cell phones, are worth every penny.
In its official statement Nokia has said, ‘if Nokia’s claim succeeds, Qualcomm would be prevented in Europe from enforcing its respective patents in relation to Nokia handsets incorporating such chipsets’. However, the move has not surprised business analysts as they have extended that the move was inevitable posturing of two companies over a license agreement that is due to expire.
