It’s no secret that virtually every mobile phone manufacturer would like a slice of Apple’s iPhone action. But Nokia is taking that desire a little literally, launching a lawsuit demanding as much as a billion dollars in patent violations.
The precise figure that Nokia wants isn’t detailed in its lawsuit. That’s prompted speculation about the possible demand. The most extreme figures being bandied about are equivalent to five per cent of the device’s retail price. Gene Munster of Piper Jaffray – a man whose predictions usually appear to be mainly based on common sense – pegs the figure at closer to one per cent, which would mean a $200 million payout.
Of course, that’s making the fairly major assumption that the case goes to trial, finds against Apple, and agrees with Nokia’s estimation of appropriate damages. It’s important to remember that the case wouldn’t just look at whether Apple’s actions breached the patents, but would also likely reassess how valid those patents were. It’s not unknown for courts in such cases to decide the US Patent Office had been mistaken in awarding an overly wide or vague patent, though such a verdict usually guarantees a lengthy appeal.
The claim is for 10 alleged violations which reportedly affect all models of the iPhone. The patents cover issues including security and wireless data transmission.
Being that the iPhone isn’t exactly a new release, it appears the two sides may have been in negotiations over use of patented technology and that those negotiations have now broken down.
The lawsuit doesn’t request injunctive relief, meaning there’s no danger of Apple being prevented from continuing to produce the iPhone. Nokia says in its claim that the nature of the patent means that Apple would have automatically had the right to use the technology upon agreeing to pay a relevant license fee – a fee it now wants to collect retrospectively.
The claim also demands compensation for the fact that Apple was able to gain market share from Nokia during the time it was “free riding” (not paying the royalties). That doesn’t seem to make much sense as it’s hard to see how Apple paying royalties would have made any difference to how many people bought the iPhone. It could be argued that Apple was able to sink the “royalty” money into additional marketing, but that’s a tenuous claim.