Nokia may have edge in dispute with Qualcomm

Nokia Oyj, the world's biggest maker of mobile phones, may have gained an edge in its technology licensing dispute with Qualcomm Inc after a United States judge ruled that it doesn't infringe Qualcomm's patents.

Administrative Law Judge Paul Luckern in New York rejected Qualcomm claims that Nokia infringed patents for a technology that prevents dropped calls. He also said one of the three patents is invalid. His decision is subject to review by the six-member US International Trade Commission in Washington.

The ITC decision may spur progress in negotiations to replace a licensing agreement, which expired eight months ago. Nokia says Qualcomm patents cover less of the technology used in the newest phones, warranting a smaller payment, Bloomberg News said. Qualcomm gets about three-quarters of its profit from licensing fees.

"Any way possible they could push the tides in their favor, they'll try like heck to do that," said American Technology Research analyst Mark McKechnie, referring to Nokia. "It's a minor setback for Qualcomm and a relief for Nokia."

Qualcomm trimmed its profit forecast for 2008 because of the dispute. Nokia refused to pay Qualcomm any royalties after that company rebuffed a US$20-million payment in April. An arbitrator is working to resolve part of the dispute, while the rest is litigated in Europe, North America and Asia.

Qualcomm said it intends to petition the trade commission for a review of the initial determination. If the commission finds in Qualcomm's favor, it could ban US imports of some Nokia phones.

"The numerous lawsuits against Nokia are part of Qualcomm's tactics for the ongoing cross-license negotiations," Nokia Chief Financial Officer Richard Simonson said on Wednesday during a conference call following the announcement. "This case is the first patent infringement case by Qualcomm filed against us to actually reach a verdict."

On November 9, Qualcomm Chief Executive Officer Paul Jacobs said, "It's going to take some external impetus to get one or other of the companies to move."

When asked on Wednesday about Jacobs's comments, Nokia's Simonson said, "I hope Paul's right."

The case before the ITC focuses on GSM technology, which stands for global system for mobile communications. The Qualcomm patents in the case relate to ways of controlling signal power so calls aren't dropped.

Nokia, based in Finland, argued that the Qualcomm patents don't cover original inventions.