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November 7, 2005

Qualcomm sues to stop Nokia US handset sales

Qualcomm Inc has applied for an injunction to halt the sale of Nokia Corp's handsets in the US, claiming that the world's largest vendor is infringing 11 of its patents. The move marks a sharp escalation of Qualcomm's battle with the main players in WCDMA.

By CBR Staff Writer

Qualcomm is also demanding damages from Nokia, claiming the infringed patents are for the manufacture or use of equipment that complies with the GSM, GPRS, and EDGE cellular standards.

Nokia incurred Qualcomm’s wrath last month by joining forces with Broadcom, Ericsson, NEC, Panasonic, and Texas Instruments in making a formal complaint to the European Union.

They alleged that San Diego, California-based Qualcomm has 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 make equipment to comply with that standard.

By bundling its patents with its chipsets, they alleged that Qualcomm is giving an unfair advantage to its own customers.

Now Qualcomm says that that Nokia is infringing Qualcomm’s patents by making or selling products in the US that comply with the GSM family of standards.

Qualcomm general counsel Louis Lupin said: We have been discussing a number of issues with Nokia for some time, including the fact that we have essential GSM patents for which Nokia is not licensed, and we are disappointed that this has resulted in litigation. Until recently, we had been led to believe that these issues might be resolved cooperatively and amicably.

He added: However, it now appears that a cooperative resolution of these issues is quite unlikely and we must move forward with the litigation in order to protect our rights and to get these issues resolved.

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Nokia responded in a statement a few hours later: The timing of this lawsuit and the comments of Qualcomm’s general counsel that a cooperative resolution of these issues is unlikely, when the patents have not been verified and licensing terms have not yet been offered or discussed, is completely inconsistent with the basic licensing principles to which Qualcomm is obligated.

A legal battle seems to be inevitable.

Last week, Qualcomm said it aimed to almost double to 86 million its number of WCDMA chipset shipments for handsets in 2006, most if which will be bought by Asian suppliers that aim to take market share from established players including Nokia.

In its release, Qualcomm trumpeted the superiority of its CDMA technology. It said demand from cellphone users for data services and multimedia features has been growing dramatically, and this is one of the primary reasons that the wireless industry has selected CDMA technology for nearly all 3G systems.

It said that faced with this demand, and spurred by competition from CDMA systems, 2G standards such as GSM have evolved to support improved data capabilities. But these evolutions to GPRS and later EDGE have adopted patented innovations developed by Qualcomm originally for use in CDMA.

Nokia’s GSM, GPRS and EDGE standards-compliant products unavoidably infringe Qualcomm’s patents surrounding these inventions that have become essential to the GSM family of standards said Qualcomm.

The late nature of Qualcomm’s legal action is surprising and will give rise to suspicion that the company with a tight grip on mobile telephony IP is seeking bargaining counters in its battle with the major players in GSM. Six of the patents in Qualcomm’s complaint against Nokia also features in the patent infringement complaint that Qualcomm filed against Broadcom in July.

This came shortly after Broadcom launched legal action alleging that Qualcomm’s licensing practices on cellular technology violated US antitrust laws and kept handset prices unnecessarily high.

Broadcom’s complaint was similar to those now under investigation by the EU. Broadcom alleged that Qualcomm had already acquired and maintained monopoly control over the sale of 2G and 3G CDMA chipsets, and possesses an approximate 90% market share.

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