Nokia Sues Apple

The battle for supremacy in the global smart-phone market is getting intense by the day. Now the matter has entered the courtroom. Yesterday, the largest smart-phone maker in the world, Nokia Corp. (NOK - Analyst Report) filed a complaint against Apple Inc. (AAPL - Analyst Report) with the Federal District Court in Delaware, alleging that Apple's legendary iPhone has violated as many as ten Nokia patents from 2007.
 
These ten patents related to technologies fundamental to making mobile handsets, which are compatible with one or more of the GSM (2G), UMTS/WCDMA (3G) and wireless LAN ( for Wi-Fi connectivity) standards. Technically these patents cover wireless data, speech coding, security and encryption for smart-phones. Nokia said that the company spent more than $60 billion in the last two decades to develop the wireless industry's strongest and broadest IPR portfolios, consisting of 10,000 patents. So far the company has entered into patent licensing agreements with around 40 mobile device makers to use its patents. However, Apple did not agree with Nokia on same terms.
 
Nokia is the world leader in the high-end smart-phone market. However, in recent times, the company has lost significant ground due to fierce competition. According to Gartner Inc, Nokia’s share has fallen to 35% in the third quarter from 41% in the previous quarter. Meanwhile, market share of Research In Motion (RIMM - Analyst Report) soared to 18.7% from 17.3% in the year-ago quarter and that of Apple to 13.4% from a mere 2.8% in the prior-year quarter. Furthermore, in the most important North America region, Apple commands about 22% market share whereas Nokia’s share has fallen to a mere 3%.
 
Nokia has not revealed the financial compensation that the company will claim from Apple, but industry sources predicted that the company may look for a 1%-2% royalty per phone from Apple. This implies approximately $6-$12 per iPhone sold. In the recently concluded quarter, Apple sold 7.4 million iPhones, up 7% over the prior-year quarter whereas Nokia sold 8.9 million smart-phones in the same quarter, down 4.3% year over year.
 
Nokia is expected to introduce three new multi-touch screen (Apple’s exclusive territory) mobile devices with QWERTY keyboard by the end of this year. Industry sources also opined that Nokia’s litigation filing may be viewed as a preemptive attempt to counter Apple in case the later raises any patent related issue regarding the touch screen technology.

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