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Nokia Wins The Patent Battle But Must Survive The Market Share War

June 20, 2011

The long-running legal battle between Nokia and Apple has thankfully reached a conclusion. The tussle between the two firms focused on claims by Nokia that Apple had infringed the mobile-phone company’s patents on technology relating to touch interfaces, display illumination, and 3G and Wi-Fi products.

The legal debacle began back in 2009 with Nokia announcing its legal action against the US computer giant. Apple promptly countersued Nokia in the UK’s territory, saying it had violated its patented technologies. International lawyers started rubbing their hands in glee as the corporate battle lines were drawn up.

Nokia’s claims were filed in courts across Europe and also Delaware and Wisconsin. One contention made by Nokia was that some of its patents were filed years before the introduction of the iPhone. The squabble spread to the US International Trade Commission (ITC), with both companies requesting that the ITC investigate the infringement claims on both sides.

The two companies finally settled—Nokia announced that Apple agreed to pay royalties for the use of its technology. The Finnish phone maker also claimed that Apple made a one-off payment of an undisclosed sum. As is often the case in such legal settlements, both sides continue, somewhat confusingly, to vehemently deny the other’s claims.

What I fail to comprehend is the length of time it takes to bring these cases to a conclusion, considering filed and archived patents are legally valid documents.

However, the Nokia victory comes at a good time for the company. Its recent financial performance has been, to put it mildly, less than bullish. Many industry pundits believe that the launch of the Apple iPhone stole a technology march on Nokia that depleted the Finnish phone maker’s market share. The fact is that Nokia’s market share during the past couple of years has fallen sharply, and its competitive challenges have intensified given the recent market acceptance of Android.

Nokia’s current performance is causing serious concern not only in the company’s boardroom, but remarkably it’s reached all the way to government levels in Finland. No doubt, these events have had an important historic impact, since Nokia provides plenty of jobs for Finnish workers and makes very healthy contributions to the country’s export earnings during its buoyant periods.

So the legal victory over Apple may provide Nokia with a warm glow given the iPhone’s competitive shadow. And it’s right and proper that patented technology should not be infringed upon. But Nokia will now have to look forward to developing newer, cutting-edge technology rather than look back at protecting older technology if it wants to regain a solid market share in the global smart-phone business.

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