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Nokia Seeks Bar on U.S. Imports of Qualcomm Chips

Reuters
Friday, 17 Aug 2007 | 10:19 AM ET

Nokia has asked authorities to bar imports into the United States of some Qualcomm chips and the phones that use them, saying they infringe five Nokia patents.

The world's top cell phone maker and the U.S. chip firm have been in a legal dispute after part of a cross-licensing deal over technology patents expired on April 9. Their increasingly bitter fight is worrying investors and the industry on both sides of the Atlantic.

Finland's Nokia, which makes more than one in three cell phones sold globally, said that it had filed a case with the U.S. International Trade Commission and that Qualcomm uses Nokia patents in certain GSM/WCDMA and CDMA2000 chipsets.

"We believe Qualcomm is using those patents on an unauthorised basis," Nokia Chief Financial Officer Rick Simonson told Reuters. "This action is clearly a response to Qualcomm's ITC case filed in June 2006."

Qualcomm's European representatives said the company had not seen the latest complaint by Nokia and declined to comment.

In June 2006 Qualcomm filed a complaint against Nokia with ITC regarding six GSM patents, asking for an injunction against Nokia's GSM phones.

Qualcomm has voluntarily withdrawn three of the patents in the case, for which a hearing is scheduled in September.

"We think the remaining three are also without merit," Simonson said. "We said then that the chance of injunction was very remote. This is still true."

Major Industry Battle

Shares in Nokia were 4.4% higher at 21.95 euros by 1345 GMT, while Qualcomm shares were up about 1.7 % at $37.55 in broadly higher markets following a U.S. rate cut.

Simonson declined to estimate how many products shipped to the United States use the Nokia patents in question and said only, "It is pretty wide."

Nokia said the patents relate to technologies that improve the performance and efficiency of mobile devices as well as enable lower manufacturing costs, smaller product size and increased battery life.

"These technologies are important to Nokia's success as they allow its products to have competitive advantages over those of competitors," Nokia said.

The major dispute between the two companies centres on Nokia's use of Qualcomm patents for high-speed 3G wireless technology, but it also has a bearing on Qualcomm's chip business, which Nokia says uses many Nokia-patented technologies.

Not in a Hurry

Simonson said Nokia preferred to reach an agreement sooner rather than later but was not in a hurry.

"If I believe in my case, which I do, I have all the time in the world. We believe that the facts are very much in our favour," he told Reuters.

Analysts estimate Nokia had paid Qualcomm about $500 million per year and wants to reduce this cost. Nokia says its patent portfolio is much stronger now than 15 years ago, when the original cross-licensing deal was signed.

Industry players and analysts expect any licensing agreement between the two to have a major impact on the future of 3G technologies.

Qualcomm has also been fighting over patents with rival Broadcom. The ITC ruled against Qualcomm in that dispute, banning imports of new advanced phones using chips the ITC said infringed on Broadcom patents.

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