Apple and Nokia Lock Horns on Cellphone Patents

SAN JOSE, Calif. (CN) – Apple and Nokia brought competing federal lawsuits this week over patent licensing, signaling the next chapter of tech wars after the U.S. Supreme Court chucked the iPhone maker’s $399 million victory over Samsung.

The opening shots were fired in U.S. District Court for the Northern District of California on Tuesday where Apple sued two companies it says are colluding with Nokia. On Friday the suit was the Top Download for Courthouse News.

Finland-based Nokia is not actually a party to the complaint 43-page complaint against Acacia Research, Conversant Intellectual Property Management and their subsidiaries.

Alleging antitrust violations in breach of the Sherman Act, Apple says “Acacia, Conversant, and many other patent assertion entities have conspired with Nokia to use unfair and anticompetitive patent assertions to improperly tax the innovations of cell phone makers.”

Nokia had been a heavy hitter in the early cellphone market but Apple says its inauguration of the smartphone era in 200 changed the landscape.

“Unable to compete with innovative companies such as Apple — which had developed a revolutionary hardware and software platform — Nokia quickly transformed itself,” the complaint states. “It changed from a company focused on supplying cell phones and other consumer products to a company bent on exploiting the patents that remain from its years as a successful cell phone supplier.”

The transformation allegedly involved Nokia essentially distributing its patents to the patent-assertion entities. Apple says their sole purpose is to pursue companies like it in court, driving up legal fees and eating into company profits.

“The PAEs can take advantage of the fact that — unlike Nokia, which now focuses on the network business — they produce nothing at all and therefore have no desire or need for “patent peace,” and can impose disproportionate discovery and litigation costs on the product companies they sue,” the complaint states, abbreviating patent-assertion companies. “By conspiring with Nokia in a scheme to disperse the Nokia portfolio to the PAEs, Acacia and Conversant can obtain more royalties from product companies than Nokia cold have obtained through direct and transparent licensing, and then share with Nokia the ill-gotten fruits of their illegal exploitation.”

Apple claims it has been sued 12 times by these entities on Nokia patents alone, and at least 40 times on other related patents that these entities have acquired.

“Acacia and Conversant cultivate a reputation for brazen and ruthless patent assertion tactics precisely to attract operating companies like Nokia to partner with them to extract value from and tax innovators based on weak patents,” the complaint states. “Over the longer run, abusive patent transfer schemes, like the one Nokia has employed here, chill standard-setting activities and the procompetitive benefits they bring.”

Apple notes that the one time that Nokia patent claims reached the trial phase of the International Trade Commission, the PAEs lost on all seven claims.

“This repeated assertion of failed legal theories through multiple case filings reflects Acacia’s intention to deliberately drive up Apple’s litigation costs, rather than to obtain royalties on valuable patents,” according to the complaint.

Nokia greeted the complaint a day later with a volley of lawsuits against Apple filed in three cities of Germany and in U.S. District Court for the Eastern District of Texas – a hub of patent litigation.

Saying it retains tens of thousands of technology patents, Nokia accuses Apple of violating 32 of them – covering displays, user interfaces, software, antennas, chipsets and video coding.

“After several years of negotiations trying to reach agreement to cover Apple’s use of these patents, we are now taking action to defend our rights,” Ikka Rahnasto, head of patent business at Nokia, said in a statement.

Nokia did not return a request for comment on Apple’s specific allegations.

Apple said Nokia is not simply defending its rights but instead is using standard and essential patents in an extortionate business model that does not produce anything of value, but instead drains the resources of companies that are making useful consumer products.

“Unless enjoined and remedied, the conduct described herein will continue to injure Apple, other participants in industries that are vital to the national economy, and consumers in the United States and elsewhere,” Apple says in its complaint.

Apple is represented by Mark Selwyn of Wilmer Cutler Pickering Hale and Dorr in Palo Alto.

Nokia is represented in its Texas lawsuits by Theodore Stevenson of the Dallas firm McKool Smith.