Analyst: Nokia’s Lawsuit May Be Preemptive Strike

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Nokia filed a lawsuit against Apple alleging that the iPhone infringes on several of its patents, and UBS analyst Maynard Um thinks it may have been in anticipation of Apple crying foul over technology included in upcoming Nokia handsets.

"We believe Nokia's suit could be a pre-emptive move ahead of its new handsets launching soon that may have multi-touch capabilities for which Apple has IP," Mr. Um said.

According to Nokia, Apple has been "free riding" because it isn't paying royalties on GSM, UTMS and WLAN technologies used in the iPhone. As such, Apple can charge less for the iPhone and unfairly gain market share.

Since Apple works with third-party manufacturers to build the iPhone, the courts will likely take a look at whether or not those companies have properly licensed the intellectual property they use, and whether or not Apple is liable for licensing payments, too.

Nokia's focus on Apple may, however, be related to more than whether or not the iPhone maker is infringing on its patents. Instead, it may be related to new handsets Nokia has in the works that use multi-touch technology that's protected by patents Apple owns.

"We would not be surprised if Apple eventually files an infringement suit if Nokia'shandsets are deemed to infringe its IP," Mr. Um said. "Ultimately, we believe an out of courtsettlement is the most likely scenario with potential cross licensing agreements."

In other words, Nokia may have filed its suit as a bargaining chip.

Considering Apple isn't likely to license it's patented technology to competitors, filing a suit to bargain with might be the only way Nokia could manage pressure Apple into a deal.

Despite Nokia's announced lawsuit, investors don't seem overly concerned about the iPhone maker. Apple's stock is currently sitting at US$205.50 in after-hours trading, up 0.30 (0.15%).

Mr. Um doesn't seem worried, either. He is maintaining his "Buy" rating and $280 target price for Apple's stock.

Comments

Tiger

You can bet dollars to donuts, if Nokia releases a phone with multi-touch technology, Apple won’t wait two years before suing. Maybe a week, tops.

And by the way…. “As such, Apple can charge less for the iPhone and unfairly gain market share.” What a ludicrous statement considering all the vitriol hurled at Apple for the high prices of the iPhones. Wouldn’t be more accurate to say “Because of the ‘free riding’, Apple might be earning a higher profit margin off the steep prices of the iPhone thus allowing them to be more dominant and gain market share.”

JamarionC

Uh oh ? this doesn’t look good for Microsoft.  Microsoft and T Mobile were named defendants in a class action lawsuit, as T Mobile and Microsoft had been hosting information from T Mobile smart phone customers, specifically Sidekick owners, on a server that went down on Friday, October 2nd, leading to users losing all of their information.  This includes calendars, contacts, the whole shebang, and T Mobile customers were not amused.  So, they sued ? especially by one Maureen Thompson, from Atlanta, who among the plaintiffs was nonplussed, to say the least, about the server failure.  Microsoft won’t need any guaranteed payday loans for court costs, but it still is a blow to their reputation.
Class-Action Lawsuit Filed Against Microsoft, T-Mobile

JamarionC

to say the least, about the server failure.  Microsoft won’t need any guaranteed payday loans for court costs, but it still is a blow to their reputation.

jfbiii

As such, Apple can charge less for the iPhone

LOL. That was the first thing that jumped out at me, too.

But following up on the analysis, it seems as though Nokia has a lot more to lose if what if really wants is a cross licensing agreement for IP…

For instance, Nokia could be risking licensing agreements with other phone manufacturers if the court decides that it’s double-dipping and trying to extract licensing fees from component AND handset manufacturers both. A ruling that says that could mean a lot more to their bottom line than just the licensing fees they’re trying to get from Apple. Additionally, it seems unlikely that if push came to shove that Apple would agree to any sort of cross-licensing of IP when they could just pay the $6?$12 fees Nokia is asking for. Cross licensing their own IP would potentially be a lot more expensive in terms of competition. It’s likely that if the IP Nokia is seeking payment for is truly incorporated in industry standards that they would also be unable to refuse to license it to all comers, whereas that isn’t necessarily true of Apple. There’s some assumptions that I’m making in that, of course, but that’s my initial read.

I could be completely off base, though, since I’m not an IP lawyer. It just seems that Nokia has a lot more to lose than just a relatively small settlement with Apple.

daemon

You can bet dollars to donuts, if Nokia releases a phone with multi-touch technology, Apple won?t wait two years before suing. Maybe a week, tops.

Palm Pre has multi-touch and Apple still hasn’t sued Palm despite threats to do so back in January….

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