Is Apple Obsession Hurting Nokia's Future?

Nokia iPhone

Dissatisfied that in a provisional ruling a U.S. judge has sided with Apple in a patent case, Nokia has just filed a whole new complaint against Steve Jobs and company. In total, it's now saying Apple abuses 46 Nokia patents. Could this relentless pursuit actually be bad for Nokia?

Nokia's new press release starts with a complaint: "Nokia does not agree with the ITC's initial determination that there was no violation" of its patent rights, and "is waiting to see the full details of the ruling before deciding on the next steps in that case"—a reference to Friday's legal decision that upheld Apple's side of the complaint in just a handful of the patent cases Nokia has brought.

"Our latest ITC filing means we now have 46 Nokia patents in suit against Apple, many filed more than 10 years before Apple made its first iPhone," says Paul Melin, VP of Intellectual Property at Nokia, the release. Then the firm's press release gets bullish: "Nokia is a leading innovator in technologies needed to build great mobile products and Apple must stop building its products using Nokia's proprietary innovation."

Let's look at these claims, including this last one. To do so, we need to work out exactly what technology Nokia's saying Apple has "stolen."

The latest filing mentions "areas of multi-tasking operating systems, data synchronization, positioning, call quality and the use of Bluetooth accessories." In May 2010, a previous complaint was related to "technologies for enhanced speech and data transmission, using positioning data in applications and innovations in antenna configurations that improve performance and save space, allowing smaller and more compact devices."

In December 2009, Nokia complained Apple was violating seven patents that cover "key features ... in the area of user interface, as well as camera, antenna and power management technologies." In October 2009, a separate complaint alleges Apple's products (nearly all of them) violate Nokia patents for "technologies fundamental to making devices which are compatible with one or more of the GSM, UMTS (3G WCDMA) and wireless LAN standards" including "wireless data, speech coding, security and encryption."

These are just some of the patents concerned, but they serve as an excellent example. Nokia says the IP itself could variously let it build a "better user experience, lower manufacturing costs, smaller size and longer battery life for Nokia products," and "allow improved product performance and design."

If you add up the various technologies Apple is alleged to be in IP violation for, they relate to how the iPhone connects to cell phone networks and wireless Net over Wi-Fi, multitasks in its operating system, syncs data to a connected PC, locates itself using A-GPS, transmits and receives high-quality voice calls, takes photos, keeps user data safe, connects to third-party Bluetooth devices, and manages its power usage to ensure longer battery life. Whew: You get the point. Strip these systems from an iPhone and you'd essentially have a dumb, low power, disconnected music player that could also run apps—ones that didn't use location data.

Looking at this summary another way, Nokia's basically saying it invented the iPhone. One problem though, and this is a key point, it didn't.

Companies as big as Nokia, no matter what tech sector they work in, all build up extensive patent portfolios—Apple included. The secret behind Apple's success with the iPhone (and other devices that Nokia says violate its IP) is that they actioned their patent filings and innovated, and integrated them into a genuinely new device. So new, in fact, it basically overturned the smartphone paradigm that Nokia had been building since its Communicator device years ago, leading to a revolution in touchscreen phone design that was so surprising to Nokia that it took the Finnish firm two years to catch up.

So what's the firm doing instead of making its own iPhone? It seems to be trying to block a competitor that has outsmarted it, while it offers no successful product in the particular marketspace in question. The company's goal is clear—it wants cash, lots of lovely hard cash, in compensation.

But what would it do with this potential windfall? In its new press release Nokia mentions it's spent €43 billion in R&D over 20 years. Would another billion euros in fines obtained from Apple make any difference to company's position? Would it make Americans buy future Nokia smartphones by the million? Or could its patent suits actually hurt Nokia's public image?

At the very least, it's easy to imagine that the company's Ahab-worthy pursuit is distracting its executive team from the crucial task of helping to produce a decent smartphone.

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