Wireless chip developer says phone maker uses two patents without paying a dime.

May 24, 2006

Qualcomm filed a lawsuit against its perennial foe Nokia in the United Kingdom on Wednesday, contending that the cell phone maker has used two of its patents without paying for them.

Qualcomm, whose treasure trove of patents has made it a top player in the cellular chip and equipment market, alleged that Nokia has infringed on its patents for GPRS (general packet radio service) and EDGE (enhanced data GSM environment), two popular standards that allow consumers to surf the web and download data quickly.

The suit, filed in the Patents Court of the High Court of England and Wales, seeks to prevent Nokia from selling phones with the disputed patents, as well as monetary compensation for the phones it has sold.

A Qualcomm spokesperson declined to say how much money the company is seeking or its sales figures for the U.K.

Shares of Qualcomm fell $0.44 to $44.94 in recent trading, while Nokia shares dropped $0.39 to $20.91.

Trading Countercharges

The lawsuit isn’t the first by San Diego, California-based Qualcomm against Nokia, the world’s largest cell phone maker. In a lawsuit filed in a U.S. court last November, Qualcomm said Nokia had used 11 of its patents and one from a Qualcomm subsidiary called SnapTrack without getting the proper licenses.

The U.S. lawsuit came after Nokia, based in Espoo, Finland, filed a complaint with the European Commission against Qualcomm last October. Nokia, along with five other chip and equipment makers, charge that Qualcomm refused to play fair in negotiating licensing agreements (see Qualcomm Faces Antitrust Woes).

Nokia could not be reached for comment.

Analysts see the latest lawsuit as a strategic move by Qualcomm in its negotiations with Nokia over renewing a licensing agreement set to expire next April. The agreement covers CDMA2000 and WCDMA (wideband code division multiple access) technologies, which allow for even faster data rates and phone features than GPRS and EDGE.

“We expect a lot of posturing from both sides over the next year as the companies try to improve their position for the license renewals due in April 2007,” Tim Long and his colleagues at Banc of America Securities said in a research note Wednesday.

Mr. Long wrote that the two companies will likely have to pay licensing fees and royalties to each other, given that each has solid patents in various cellular technology standards.