Nokia Patent Case Against Qualcomm Reinvigorated

By Tatum Anderson for Intellectual Property Watch
A patent infringement case brought by US technology firm Qualcomm against Finnish mobile phone manufacturer Nokia at the US-based International Trade Commission (ITC) has been reinvigorated, with a hearing scheduled for 10 September.

The case had been postponed indefinitely back in February after the ITC ordered a stay on the investigation following a judge’s reported retirement. However, the ITC has announced that it has appointed a new judge to hear the case.

As a result, briefs and other documents are expected to be filed with the ITC in time for the hearing before an Administrative Law Judge (ALJ) in September.

The judge is expected to make a preliminary decision on the case by 17 November. After that the six commissioners making up the ITC board will review his decision, issuing a final edict by March next year.

The trial is scheduled to begin in September and will last approximately two weeks. During that time the ALJ is expected to take considerable additional evidence in the form of testimony.

The case was originally brought by Qualcomm in June 2006. It asked the ITC to ban imports of Nokia products it claims infringe its patents. This intellectual property relates to a second-generation wireless technology called GSM – used by over 2 billion people worldwide.

Specifically, Qualcomm says many of Nokia’s handsets infringe its GSM patents. It offered to license these patents to Nokia under terms that are “fair, reasonable and free from unfair discrimination,” but the company has refused to pay royalty fees, it says.

In a statement at the time, Qualcomm said: “Nokia’s products unavoidably infringe Qualcomm’s patents surrounding these inventions that have become essential to the GSM family of standards.”

Interpreting Nokia’s continued sale of GSM-based handsets without royalty fee payments as patent infringement, Qualcomm brought a series of infringement cases against the company at courts in the Eastern District of Texas, the Western District of Wisconsin and the United Kingdom last year. There are similar cases pending in France, Germany, Italy and China (The UK and German cases are scheduled to be heard later in the year).

Finally, in June 2006 Qualcomm brought the case at the ITC. The ITC agreed to launch a probe, called a Section 337 investigation, on 9 June 2006. Such cases typically relate to intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods.

For its part, Nokia does not believe Qualcomm actually owns any GSM patents because it was involved in the standards movement that created the technology, Nokia says. Rather, Qualcomm was integral to the creation of another second-generation wireless technology called CDMA, not GSM.

A Nokia spokesperson said, “The court cases are to establish whether they do have GSM patents. Qualcomm has never been a player in that field – this is what the contention is about. We are challenging whether these are valid patents.”

In ITC case documents, Nokia retorted that Qualcomm had engaged in misleading conduct because, when it negotiated a CDMA deal in 2001, it had no idea that Qualcomm held patents related to GSM technology and that it would need to acquire a licence for GSM-based products.

Nokia has stated that even if GSM patents are found to exist, they are unlikely to be valid or enforceable. Qualcomm says it has patents; that when it was developing CDMA technologies, some of its intellectual property was used to improve GSM, and that’s why there are GSM patents in existence.

Derek Aberle, vice president and general manager of Qualcomm’s licensing division, said, “We feel very strongly that we have a number of patents that apply to our GSM products. When we were developing EVDO technology [a type of CDMA technology], we solved a number of problems that also came up in the GSM system. A lot of those solutions were then adopted.”

However, the GSM cases at the ITC and various national courts are almost a distraction from the fundamental disagreements between the two companies. They have been unable to renegotiate a completely separate patent licensing deal.

That deal relates to the royalty fee level charged by Qualcomm for its CDMA patents (IPW, Subscribers, 3 May 2007). Nokia believes it should pay Qualcomm less for newer patents relating to a third-generation wireless technology called WCDMA because it contributed less to this technology compared with second-generation CDMA technology.

As such it has stopped paying Qualcomm fees the company says it expects. Qualcomm has retorted that its third-generation technologies patents are essential to the WCDMA standard and should therefore remain the same price as second-generation CDMA royalty fees.

So while this impasse persists, negotiations have turned sour, and both companies have brought infringement cases related to other technologies, like GSM, against each other.

The slew of GSM-related cases at the ITC and national courts came shortly after Nokia, together with four other manufacturers, filed a complaint with the European Commission in October 2005.They accused Qualcomm of contravening Competition law.

And last month [June], Nokia even filed an infringement case related to mobile TV technologies, for the first time at US courts.

Although the GSM patent infringement may only be one battleground of many, the consequences could be serious if Qualcomm wins.

The ITC’s powers of remedy are extremely strong. The primary remedy available in Section 337 investigations is an exclusion order that directs US Customs to stop infringing imports from entering the country. The Commission can also issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337.

Qualcomm has already felt the brunt of the ITC remedy. Last month, in a separate case, Qualcomm was banned from importing chips and chipsets found, by the ITC, to infringe a US patent held by another manufacturer called Broadcom. The exclusion order affected devices containing these chips including cellular telephone handsets and personal digital assistants (PDAs) that contain Qualcomm’s infringing chips and chipsets.

Despite the potential consequences Nokia says it is not worried about the ITC case. It believes that Qualcomm has a relatively weak case, because it originally filed six patent infringement cases but later withdrew three.

The spokesperson explained, “Qualcomm withdrew three of them voluntarily. So our position is that is the reflection of the lack of strength of the case.”

Tatum Anderson may be reached at info@ip-watch.ch.