Finnish mobile giant Nokia Corp. said Research In Motion Ltd. is in breach of a patent licensing agreement between the two companies and has filed suits in U.S., U.K. and Canadian courts that could halt sales of BlackBerrys at a crucial time for the Canadian smartphone maker.
In a statement, Nokia said the two companies have had a contract since 2003, but that RIM sought arbitration in 2011 to extend the use of a licensing agreement that related to wireless local access network technology (WLAN), more commonly referred to as WiFi.
A Swedish arbitrator ruled this month against RIM and found that “RIM was in breach of contract and not entitled to manufacture or sell WLAN products without first agreeing royalties with Nokia.” The court cases were launched “with the aim of ending RIM’s breach of contract,” Nokia said.
Court battles such as these are becoming more common in the global smartphone industry. Apple Inc. and Samsung Electronics recently fought a prominent battle in the U.S. court system and Google Inc. is widely considered to have bought Motorola for its patents.
But for Nokia and RIM, both companies that have struggled recently in the smartphone wars, the battle for any extra royalties is an important one. Nokia, in particular with its strong history of R&D, is considered a powerful industry player in terms of patents. But both Nokia and RIM have lost huge swathes of market share, and have seen their stock sink to new lows, as their latest smartphones have failed to sell as well as devices from Apple and Samsung.
RIM, through a Canadian spokesperson, said the company does not comment on pending litigation. But given the 2003 start of the patent licensing agreement and the basic technologies to which it relates, it’s likely that these court cases could halt sales of BlackBerrys currently being sold. It’s unclear whether the court case is also targeting RIM’s coming line of BlackBerry 10 smartphones.
“The arbitrator’s ruling is a blow to RIM at an inopportune time given the fact the BlackBerry 10 launch is right around the corner,” said Kevin Restivo, a mobile device analyst at global research firm IDC, noting that there were still a variety of options open to the company.
“RIM could, for example, try to develop some sort of workaround to avoid the need for a deal with Nokia which theoretically gets it out of the company’s cross hairs... This option isn’t likely given the complexity and time taken to develop wireless technology communication patents and equipment. It’s far more efficient to pay the patent holder, in this case Nokia... There’s no sign an injunction of any sort is imminent so RIM could still pursue other legal avenues as it sees fit.”
In the past, RIM has mishandled some pretty major legal cases. In 2006, it had to pay $612-million (U.S.) to NTP Inc. after battling patent infringement allegations in court. It also announced that it’s BlackBerry 10 operating system would be called BBX before it was revealed that another company already had the rights to that name. But RIM, a much smaller company by market capitalization and employee count than many of its global peers, has been trying to boost its patent portfolio: It was part of a coalition of companies, which included Apple, that bought a batch of patents from Nortel Networks.
In a recent interview, RIM’s new chief legal officer Steven Zipperstein said that patent disputes would be a major focus of his tenure at the company. He said that RIM was planning on working with other companies and governments to try and bring a sense of order to the chaotic flurry of patent lawsuits now bouncing around the wireless industry. “The result of all this litigation is that it doesn’t benefit consumers, it doesn’t benefit innovation,” Mr. Zipperstein said at the time.
“Nokia is desperate for all possible sources of revenue,” says Kris Thompson, an analyst with National Bank Financial. “It looks like if RIM loses to Nokia the cost could be $5-10 per smartphone, so $175 to $350-million on our 35-million handset shipments forecast next year. A potential few per cent points hit to our gross margin forecast. Negative, but for sure not RIM’s primary concern right now.”
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Once more into the fray -.-
Source: The Globe and Mail
