Nokia to pay Qualcomm $20M, but the fight continues

Nokia Corp. announced it will pay Qualcomm Inc. $20 million in patent royalties for the second quarter of this year, a move that stands as yet another thrust in the face-off between the two wireless giants. At the heart of the issue is a cross-licensing agreement for wireless patents that is set to expire Monday.
In announcing the $20 million payment, Nokia offered fiery rhetoric uncharacteristic of the usually staid Finnish vendor.
“Nokia believes that Qualcomm’s patent portfolio is concentrated in the United States, and that it has few or no alleged UMTS patents in many of the countries in which Nokia has substantial UMTS handset sales. When Qualcomm’s early patents become paid-up and royalty-free on April 9, 2007, Qualcomm’s share of all patents relevant to Nokia UMTS handsets will significantly decrease,” said Rick Simonson, Nokia’s CFO. “It is important to note that as of April 9, 2007, Qualcomm’s entire chipset business becomes exposed to Nokia’s extensive GSM, W-CDMA and CDMA patent portfolios and Nokia will use all rights from those portfolios when defending itself against any new Qualcomm litigation.”
Interestingly, Nokia said that, until this year, it has paid less than 3 percent in license fees for all of its patent license agreements involving W-CDMA products.
According to Maynard Um at UBS, Nokia’s $20 million payment for second-quarter royalties implies Nokia is now paying a rate of 0.55 percent.
“While Nokia can now likely argue that Qualcomm is unwilling to come to a renegotiation, the question is whether Nokia technically would still be infringing without an official deal from Qualcomm,” Um wrote in a note to investors. “While Nokia indicates payment has been made, it is unclear whether Qualcomm has accepted the payment.”
Qualcomm did not immediately respond to requests for comment.
Um said Nokia’s $20 million payment is part of the companies’ negotiating process, and that UBS does believe that the two parties ultimately will come to some kind of agreement.
Nokia’s announcement comes just a few days after Qualcomm filed a patent-infringement suit against Nokia.