NEW YORK: Qualcomm Inc. has sought arbitration into its legal battle with mobile phone maker Nokia over the use of patents Thursday even as a major licensing agreement between the two companies is set to expire 9 April.
The company asked the American Arbitration Association to intervene and give a ruling that the continued use of its patents by Nokia beyond the expiry date would amount to the latter extending the existing agreement on the same royalty rate.
Nokia, which has been seeking a reduction in the royalty fee, took a preemptive step earlier paying Qualcomm $20 million for using the patents in the second quarter. Qualcomm, however, said the payment amounts to only fraction of what is due to it.
The patent in question pertains to WCDMA, a technology for mobile phones to set up high-speed internet connections. The technology is key to Nokia for its survival in a highly competitive global market for advanced cell phones.
Many observers feel the arbitration may not be a solution as the two companies have moved apart quite a bit. Besides, an arbitration may prolong for at least a year. They also point out that the $20 million payment would amount to 10 per cent to 20 per cent of what Nokia would have paid Qualcomm under the existing terms of the agreement. Nokia argues the fee should reflect the investment it has made to develop high-speed wireless technology since the last license agreement.
Qualcomm maintained that Nokia has no right to decide on the price. The payment is like a consumer taking a product from a store and leaving only a fraction of the established price. The company also rubbished Nokia's contention that it is paying cumulative royalties of no more than 3 per cent on WCDMA products sold through 2007. It said Nokia has been paying a royalty on WCDMA handsets in excess of 3 per cent to Qualcomm alone.
Meanwhile, Qualcomm has filed two new patent infringement lawsuits against Nokia.
