25 May 2017
In December 2016 Nokia asserted patents relating to displays, user interfaces, software, antenna, chipsets and video coding against Apple across multiple jurisdictions. Apple retaliated by initiating an antitrust lawsuit in the US, as well as removing a number of Nokia ‘health products’ from their retail stores.
Initiating multiple patent infringement actions simultaneously is a common tactic to swamp defendants in court procedure, making a worldwide settlement the easy way out; however Apple are perhaps one of the few companies that would have had the resources and inclination to contest numerous lawsuits simultaneously – as the Apple v Samsung patent saga had shown.
However, while Samsung and Apple are of course fierce commercial competitors, Nokia’s share of the mobile telecoms market is now negligible in comparison. In response to this decline, Nokia have altered their business model so to leverage the large patent portfolio developed during their historic dominance of this market. This portfolio was significantly bolstered by the acquisition of Siemens’ share of NSN in 2013, and Alcatel-Lucent in 2016.
This shift in business model has led some commentators (and indeed Apple themselves in court documents) to label Nokia a ‘patent troll’ – an entity which is able to issue spurious patent infringement actions without fear of retaliatory lawsuits significantly impacting other business activities.
In this regard, the antitrust suit filed by Apple was the logical response – any precedent which would limit Nokia’s ability to extract licence revenue would have been highly damaging to Nokia’s nascent business model (in particular with respect to standard-essential patents).
Whilst the terms of the agreement and the sums changing hands have not been released, I expect that Apple would have negotiated a favourable deal – with Nokia happy to oblige so that they can parade Apple as a licensee when requesting royalties from the rest of the industry.
It remains to be seen what Nokia’s next move will be, but no doubt they would have been emboldened by this settlement without having to go through the pain of protracted litigation. Apple on the other hand are probably relieved to put this battle behind them just as the war with Qualcomm seems to warming up.
For the rest of the industry, there will be some disappointment that this dispute has fizzled out without setting a precedent, and this in turn will likely only add to the animosity towards patent licensing entities demanding high royalty rates for patents of dubious value. In this regard patent attorneys are uniquely placed to advise on both issues of patent ‘essentiality’ and to interpret what licence rates are truly ‘reasonable’ – two factors which can assist even the smallest entities to apply some pressure of their own back on the likes of Nokia.
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