Apple suing Nokia in patent dispute, accuses company of extortion, attacks patent trolls

We reported yesterday that Nokia filed a lawsuit against Apple, claiming the company had violated no fewer than 32 of its patents in every iPhone from the 3GS onward. Just for good measure, the lawsuit also includes every iPad, the Apple Watch and Apple TV.

The WSJ now reports that Nokia was responding to an Apple lawsuit accusing the company of deliberately excluding the 32 patents from an agreement reached between the two companies in 2011, and transferring the patents to third-party companies in order to extort excessive royalties …

In 2011, Apple settled a two-year patent case with Nokia and agreed to pay licensing royalties for use of some Nokia patents in iPhones. In a suit Apple filed Tuesday in the U.S. District Court for the Northern District of California, the Cupertino, Calif.-based company argues that Nokia excluded some patents from that agreement and transferred them to third-party companies “to be used for extorting excessive royalties” from Apple. It asked the court to award damages and rule that Nokia breached its contract.

Nokia said in 2011 that the agreement reached then settled all patent disputes between the two companies.

Nokia announced that it has signed a patent license agreement with Apple. The agreement will result in settlement of all patent litigation between the companies, including the withdrawal by Nokia and Apple of their respective complaints to the US International Trade Commission.

(In an interesting side-note, Samsung and its lawyers were later fined $2M for revealing details of that settlement through papers obtained in its own patent battles with Apple.)

As it turned out, the settlement didn’t end things, with five further patents originally held by Nokia transferred to a patent troll which unsuccessfully sued Apple for $100M last year. Apple is seemingly aiming to head off further such cases.

Apple says that it was willing to pay royalty fees on FRAND terms – an international agreement which says that patents for essential technologies used by all companies in a particular field will be licensed on a Fair, Reasonable And Non-Discriminatory basis –  but that Nokia has partnered with patent trolls in order to obtain more money. Patent trolls (or, in legal terms, Patent Assertion Agencies) are companies whose business model is buying patents in order to demand often excessive royalties. The PAEs are not bound by FRAND terms and can demand much higher fees.

Apple is seeking to bar Nokia from passing ownership of FRAND-eligible patents to third-party companies. If it succeeds, the lawsuit could set a precedent which would protect Apple from patent trolls in general. Back in 2014, Apple revealed that it was targeted by more patent trolls than any other company.

Photo: Reuters