Intellectual Property Expert Group (ipeg)

Is Nokia to turn the tables in the standards game?

Lately patent infringing issues arising from implementing standard compliant products are catching the news media, among which in Europe the decision in Orange-Book-Standard by the German Bundesgerichthof (BGH). In the US Nokia sued Apple for producing it top selling iPhone compliant with the telecommunication standards GSM, UMTS and the networking standard WIFI, alleging 10 Nokia patents infringed. While these patents have been licensed by 40 other companies, including all major vendors of mobile devices, only Apple has refused to agree to Nokia’s “appropriate” licensing terms. Highlighting its R&D costs, Nokia wants a fair reward for its IP.

That is quite a fine argumentation.  This looks quite a bit similar to the game plan IPCom GmbH & Co. KG is playing against Nokia in the ongoing infringement proceedings in Germany at the German Landgericht Mannheim. To refresh memory, IPCom GmbH & Co. KG, a small NPE from Pullach, Germany, also wants to exploit some GSM patents. While IPCom GmbH & Co. KG is of the opinion that a 5 percent license fee for licensing of about 35 GSM-essential patents would fit the ETSI FRAND policy, Nokia only offers a royalty fee in the range of a few thousandth of the product price. By the way, it is not very likely that we will get a numerical term set by the German court in the near future. Firstly, because this infringement proceeding has been suspended by a patent invalidity claim filed at the German Bundesgerichtshof (BGH), and as we can see from our earlier blog , the estimated turnaround is counted in years rather than in months. Secondly, it appears that the German jurisdiction keeps its mouth tightly shut about concrete RAND figures.

Back to the story. It seems as if Nokia is turning the table. Initially Nokia was sued by emerging and innovative firms for infringing standard related IPRs (i.e. Qualcomm), these days Nokia sues those companies which poaches on Nokia’s territory and could develop into powerful competitors. Under these circumstances it would be quite interesting to see what “appropriate” license fee they have in mind, which is demanded from Apple. It is rather unimaginable that Nokia wants to charge only a few thousandth of the product price. Such an licence fee, would only total up to a low two-digit million range, taking a sales figure of 25 million devices as a basis. But actually, this is Nokia’s notion of an “appropriate” royalty rate in the IPCom GmbH & Co. KG proceedings. Should that really be worth the trouble? Or can we assume, that Nokia’s idea of an “appropriate” license fee does not quite fit Apple’s idea? Maybe this is the reason, why Nokia uses the term “appropriate” in its press release rather than the well known technical term “fair, reasonable and non-discriminatory (FRAND)”. By calling a spade a spade Nokia would be more likely to enmesh in contradictions regarding its own offer in the IPCom GmbH & Co. KG proceedings.

We don’t know whether the recent proceeding really is a serious task. Maybe it is just a step in a more global strategy to open the attractive Apple patent portfolio (just think about the US-Patent Nr. 7,479,949, which covers the genial multi touch capabilities of the iPhone screen) through an upcoming cross-licensing agreement. That wouldn’t be unthinkable as cross-licensing is a common practice among the majors in the mobile standards world. But that would also mean, that Nokia has already accepted Apple as a kind of “teammate” in the standards economy. Well, we shouldn’t speculate on this. Nevertheless, by turning the table in the standards game Nokia has to pay attention not to fall into its own trap.

Stephan Dorn