The MTTLR Blog

After withdrawing its complaint against Qualcomm, Nokia filed a suit against Apple claiming the iPhone infringed on Nokia’s wireless technology.  Both parties stipulated to an extension for Apple to answer the complaint, and with that answer came a countersuit.  Apple alleges infringement of 13 patents, and effectively claims that Nokia copied iPhone technology and design, only to accuse Apple of infringing that very technology and design.

One of the issues in the dispute is whether the alleged Nokia patents are essential to a standard set by ETSI, a european standard setting organization.  When access to patents are essential for a competitor to comply with a standard, the owner of those patents is (theoretically) required to license those patents to competitors under Fair, Reasonable, and Non-Discriminatory terms (F/RAND terms).  If the patents at issue in this case are found to be essential to the standard, Apple claims that the royalty fees charged by Nokia are excessive–a claim that echoes the issue in the Qualcomm case.

More interestingly, Apple alleges that Nokia demanded reciprocal licensing of Apple technology as a requirement to license the essential Nokia patents.  Basically, according to Apple, Nokia pledged certain patents to industry standard use, and then when it came time to license those patents under F/RAND terms, leveraged those patents for excessive royalty fees, and demanded a free-ride on competitor (Apple) technology.  If Apple’s allegations are true, this sounds like a hold-up: once patents are pledged to a standard, all competitors need access to those patents in order to comply with the standard.  When access to those patents is provided only upon surrender of the licensee’s other non-essential patents, licensees are presented with the faustian choice between non-compliance or surrender of intellectual property.  This doesn’t sound like the “fair” or “reasonable” that the doctrine of “fair, reasonable, and non-discriminatory” contemplated.  It actually sounds like an anti-competitive free-grant-back.

European Union (EU) regulators closed their investigation of  Qualcomm Inc. after all of the companies accusing Qualcomm of charging excessive royalties on technology patents withdrew their complaints. In 2005, six technology companies filed complaints alleging that the royalties Qualcomm has charged since its patented technology became part of Europe’s 3G standard are unreasonably high. Two of the companies, Nokia and Broadcom, withdrew their complaints after reaching separate outside settlements. Ericsson said in a statement that it is withdrawing the complaint and continuing “its ongoing dialogue with competition authorities around the world in relation to Qualcomm’s licensing practices.” Since all complaints have now been withdrawn, the EU dropped its investigation and is focusing its resources elsewhere. Qualcomm still faces antitrust scrutiny elsewhere in the world. Japan’s Fair Trade Commission said in September that Qualcomm coerced Japanese mobile-phone makers into agreements that prevented them from asserting their intellectual property rights, impeding fair competition and ordered Qualcomm to rescind the restrictive provisions. Earlier this year Qualcomm was fined 260 billion Won ($220 million USD) by South Korea’s antitrust agency for deterring competition through unfair fees and is currently appealing the fine. While the EU closed its four-year old antitrust investigation without levying a fine, Qualcomm was not absolved of wronging and the investigation could be restarted if another complaint is filed.