SCENARIOS-What lies ahead in Nokia vs Apple legal battle

HELSINKI Mon Jan 18, 2010 5:58am EST

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HELSINKI Jan 18 (Reuters) - Finding a winner in the legal battle between Nokia (NOK1V.HE) and Apple (AAPL.O) will likely take years as the two cellphone giants use the courts to pressure each other into a licensing agreement.

Nokia dominates the global handset industry but has been losing ground in the high-end of the market to newer players like Apple, which started to sell its first iPhone model in mid-2007.

Analysts have said Nokia -- holder of one of the strongest patent portfolio in wireless space, along with Ericsson (ERICb.ST) and Qualcomm (QCOM.O) -- could seek patent infringement payments from Apple totalling as much 1 billion euros ($1.44 billion). [ID:nLN464459]

Following is an outline of the battle that is starting to unfold and what could come next:

DELAWARE, ITC CASES

In October, Nokia filed its first suit in the U.S. District Court of Delaware, saying Apple had infringed 10 patents in technologies like wireless data transfer, a key factor in the success of iPhone. [ID:nLM664007]

The patents also cover speech coding, security and encryption, and Nokia has alleged that they are infringed by all iPhone models shipped since the iPhone was introduced in 2007.

Apple countersued in Delaware in December, claiming Nokia is infringing 13 Apple patents. [ID:nN11260646] Nokia has until Feb. 8 to respond to the filing.

Cases like this usually last two to three years.

Apple last week also filed a complaint against Nokia with the U.S. International Trade Commission (ITC). It did not release details.

Their filing follows one from Nokia, which said on Dec. 29 it had lodged a complaint with the ITC alleging Apple had infringed seven Nokia patents in "virtually all of its mobile phones, portable music players, and computers" sold. [ID:nLDE5BS173]

ATTACKING PATENTS

The Delaware cases could be stayed for re-examination of patents or for the duration of ITC investigation.

It is unlikely someone could make a mobile phone without using technologies Nokia has patented but lawyers have said that would not prevent Apple from questioning the patents.

Nokia has successfully attacked the patents held by Qualcomm as part of a major global legal fight that lasted between 2005 and 2008, and also those of InterDigital (IDCC.O) earlier this year.

"There are so many ways to attack a patent," said patent lawyer Alton Hornsby from law firm Merchant & Gould.

A patent's novelty and non-obviousness are often questioned.

Apple could ask the U.S. Patent Office to invalidate the patents or to review them. This process, called interparty re-examination, could take six to seven years.

"It would definitely cause a ripple in the industry if Apple were to invalidate those patents. Where would it put all the other companies?" Hornsby said.

Nokia has cross-licensing deals with 40 companies, including all top cellphone makers but Apple.

MORE BATTLES?

After first charges have been filed in the United States Nokia or Apple could then take the battle to European courtrooms, as happened in the Nokia-Qualcomm battle.

Analysts said Nokia could also file more case in the United States.

"This dispute is still in its infancy. I don't think Nokia is finished with evaluating the infringements by Apple. It might be just the surface," said Steven Nathasingh, chief executive of U.S. technology research firm Vaxa Inc.

Apple is fighting on other fronts as well. Last week, Eastman Kodak Co EK.N filed two suits against Apple that claim infringement of patents related to digital cameras and certain computer processes. [ID:nN14179686]

iDEAL?

Analysts said the best solution for both companies would be to settle the case with mutually acceptable payments, but it could take a long time for the two sides get to that stage.

Vaxa's Nathasingh said any ITC ruling would likely boost negotiations between Nokia and Apple, bring the two closer to an agreement, as was the case in the legal battle between Kodak and Samsung.

The trade body, which has the power to ban product imports into the United States, will likely decide in January whether it will open an investigation based on Nokia's claim and by mid-February whether to start investigating Apple claim.

"Although the ITC ruled in favour of Kodak, it did so in only limited number of its claims. The real story though was that the ITC decision kickstarted negotiations between the companies which resulted in cross-licensing agreement in December 2009," he said. (Editing by Karen Foster) ($1=.6931 Euro)

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