In a scarcely coded threat, Qualcomm said in its latest quarterly filing with the SEC that that unless its reaches a new license agreement with Nokia when the present one expires on April 9, 2007, the world’s largest handset vendor would lose the right to sell products based on patents essential to the CDMA, WCDMA, and other standards.

Nokia said it was optimistic a new deal would be reached but bad blood between the two companies means it is possible they may eventually fight it out in the courtroom to determine the terms of a new deal.

Both companies have just posted quarterly figures that show they are profiting hugely from a booming mobile phone market, with a growing appetite for 3G phones in developed countries and huge demand for handsets in developing countries.

Nokia, which estimates that it has increased its share of the handset market to 35%, did even better than the market was expecting with net income in its first quarter up 21.4% at 1bn euros ($1.29bn) on revenue up 28.5% at 9.5bn euros ($11.7bn).

Qualcomm put in an equally dazzling performance in its second quarter with net income up 11.5% at $593m on revenue 34.4% higher at $1.83bn. With its chipsets at the center of a push by Far Eastern manufacturers into the GSM markets on top of an already dominant position in CDMA, Qualcomm has upgraded its forecast for revenue growth for the year from 18% to 25%, to 25% to 30%, to reach a range of $7.1bn to $7.4bn.

While reaping the riches of a mobile handset market that Nokia estimates will grow this year by 15% to 914 million, Nokia irked San Diego, California-based Qualcomm when it joined five other companies at the end of 2005 to complain to the European Union that Qualcomm failed to comply with the commitment assumed by all participants in defining the WCDMA standard, in that it would license its technology in fair, reasonable and non-discriminatory terms to anyone that wanted to take part in making equipment to comply with that standard. They alleged that Qualcomm was bundling its patents with its chipsets to give its customers an unfair advantage as part of its plan to double to 86 million its number of WCDMA chipset shipments for handsets in 2006.

Qualcomm, whose ferocious defense and exploitation of its IP has won it few friends in the industry, retaliated by filing an action in California accusing Nokia infringement of twelve patents relating to GSM/GPRS/EDGE and position location.

Espoo, Finland-based Nokia further distressed Qualcomm in February by announcing an agreement to merge its CDMA handset businesses with Sanyo Electric Co Ltd, aiming to establish a leading position in CDMA, which has been the core market for Qualcomm chipsets.

Qualcomm acknowledged that it licensed Nokia patents and said if no deal was reached, its rights to sell integrated circuits under Nokia’s patents will likewise cease.

There is no trace in Nokia’s first-quarter statement that it has suffered from Qualcomm’s push into its territory, and mobile device volume increased by 40% to 75.1 million in what is traditionally the quietest quarter of the year.

It is confident that it can hold its commanding 35% market share in the second quarter. While sales in its core European market rose 8% to 3.39bn euros ($4.17bn), it jumped by 88% to 934m euros ($1.15bn) in North America where it has traditionally been weak. It said it has also been encouraged by growth in developing markets where most of volume growth is expected to be generated. Sales in China rose 45% to 1.26bn euros ($1.55bn), and in Asia/Pacific they increased 48% to 1.9bn euros ($2.3bn).