Just as it seemed as though the smartphone patent wars had begun to settle down, they’re back in a big way. Apple Inc. (NASDAQ:AAPL) is in the thick of it — as it so often is — and this time the adversary is Nokia Corp (ADR) (NYSE:NOK). Here’s everything you need to know about the latest Apple patent lawsuit.
FRAND, AAPL and NOK
Apple and Nokia have had a long history of litigation that culminated in a 2011 agreement. Apple agreed to pay Nokia licensing fees worth hundreds of millions of dollars in exchange for its use of technology patented by NOK. As part of the agreement, AAPL has also paid NOK ongoing royalties on iPhone sales.
At the heart of their dispute — which began in 2009 — are patents which have been ruled to be covered by FRAND terms. Fair, Reasonable and Non-Discriminatory licensing terms are applied to patents that are considered to be essential to an industry. FRAND prevents key technologies like 3G radios from being controlled by a single patent holder, while ensuring that patent holder does receive fair royalty payments from all companies that use it.
Apple Patent Lawsuit: Who Fired the First Shot?
Who shot first isn’t necessarily key to the eventual outcome of a case, but it does help to understand the strategy being employed.
In this case Nokia is clearly the aggressor and it’s bringing in the big guns to help it pressure Apple. This latest battle apparently began with Nokia selling the rights to some of its patents to two firms with a reputation of being “patent trolls.” Conversant Inc (NASDAQ:CNVR) and Acacia.
These patent assertion entities (also known as PAEs) have a history of filing tech lawsuits after acquiring patents from partner companies, then splitting the proceeds with the original patent holder. Acacia alone has sued Apple over 40 times in the past.
Acacia recently won a $22.1 million verdict against Apple — for infringing on a patent acquired from Nokia — and Conversant was on the winning end of a $7.1 million judgement against Apple earlier this month. Again, patents acquired from Nokia were at the heart of this lawsuit.
In another wrinkle in this battle, just days ago, Conversant hired Apple’s former head of patent licensing as its new president and CEO.
AAPL retaliated by filing a lawsuit against Nokia, Conversant and Acacia. In it, the company accused the two PAEs of:
“Conspiring with Nokia in a scheme to diffuse and abuse [standard essential patents] and, as the PAEs and Nokia fully intended, monetize those false promises by extracting exorbitant non-FRAND royalties in way Nokia could not.”