Qualcomm, Nokia skirmish heats back up

Qualcomm and Nokia are back in the courtrooms, this time in Britain, battling over the same patents the two companies failed to reach licensing agreements over last summer. The new legal action comes one week after Qualcomm won two significant victories over Nokia and chipmaker Broadcom.

Proceedings began today in the British High Court over Qualcomm’s lawsuit to bar Nokia from selling GSM/GPRS phones in the U.K. because they allegedly violate Qualcomm’s 2G technology patents. In the first stage of the proceedings, the court will decide whether the patents are valid and, if so, whether Nokia is infringing on them. The second phase would then rule on possible damages and consider the ban itself.

Qualcomm filed the complaint last year in the U.K. after filing a similar lawsuit against Nokia in U.S. District Court, but the individual suits are just spats in the overall battle between the Finnish handset maker and the CDMA chipset maker. The two have been butting heads in courts around the world and taking their cases to the U.S. International Trade Commission and the European Commission, over what is essentially Qualcomm’s core business intellectual property business model. While GSM vendors struck open licensing deals for cellular technology that ultimately dominated the global market, the same isn’t true for GSM’s flavor of 3G, wideband CDMA, which incorporates wideband CDMA technologies developed by Qualcomm. Qualcomm has been enforcing its W-CDMA patents and even those related to GSM and GPRS to the fullest extent possible. That in turn has led its competitors to exercise their own patent claims.

Qualcomm lately has been coming out on top in these global skirmishes. Last week the ITC dropped Nokia’s case against Qualcomm and ended its investigation of Qualcomm due to pending arbitration. Nokia was following Broadcom’s cue in seeking to get a ban on phones using Qualcomm’s chips because the allegedly infringed on its patents. Broadcom succeeded in pressing its case for the ban on all 3G handsets imported into the U.S.—potentially a disaster for Qualcomm—but the federal courts watered down the ban to the point it had practically no effect on Qualcomm’s shipments whatsoever.

Also, Qualcomm succeeded in getting damages in a concurrent civil lawsuit filed by Broadcom halved to $19.6 million. A federal district judge said Broadcom had not proved Qualcomm willfully infringed on its patents. Broadcom was given the option of accepting the reduced fine or re-filing the case. Broadcom chose to take its money and go home.

Though those individual cases are settled, Qualcomm and Nokia are expected to increase the pressure on one another as their unresolved licensing issues come to a head. In April, Qualcomm and Nokia’s cross-licensing deal expired, leaving the largest handset maker in the world without a royalty agreement in place. Nokia offered to pay Qualcomm $20 million to temporarily license Qualcomm technology for the quarter, but the payment was only a fraction of what Qualcomm received in royalties for Nokia handsets in the past, leading the chipmaker to reject the offer outright. Qualcomm and Nokia cut off negotiations and launched a new round of intellectual property lawsuits in the courts.

The ongoing battles, however, have begun to take their toll on Qualcomm. The cost of doing business with Qualcomm has started leading some vendors to shy away from technology Qualcomm has substantial stakes in, and the debate has started to bleed into the standards bodies. Qualcomm itself is starting to feel the financial burn of the constant litigation, estimating it will spend $200 million on legal fees in 2008.