The world’s largest mobile phone maker, Nokia, has asked the United States to ban imports of chipsets made by Qualcomm Inc., along with phones and other products made with those chipsets. Nokia has told the International Trade Commission that the San Diego based company Qualcomm has not properly compensated Nokia for its technology.
As the mobile phone industry grows and provides more services than Dick Tracy could have imagined, legal disputes over money are more likely to occur. Once lucrative royalties may not look so good to patent holders, as their technology is used to deliver services that a few years ago didn’t exist.
Nokia and Qualcomm had a 2001 licensing agreement that lapsed in April of 2007. According to Paul Sagawa, an analyst for Sanford C. Bernstein & Company, in the past few years Nokia has paid Qualcomm around $100 million a quarter to license its chip technology. Nokia feels that it should pay a lower rate for Qualcomm patents because it has patents that control some of the new technology.
If this type of dispute escalates in the mobile phone industry, we may see all-out-war as patent users and patent holders fight for the lucrative fees that customers worldwide pay for new innovative services and technology. International trade lawyers may be able to rack up hundreds of millions of dollars in legal fees, while service remains in limbo. In the end, it’s the consumer who pays for these fights with increased fees for new patent agreements and lawsuits. Why can’t Nokia and Qualcomm play nice?