Nokia made a payment of US$20 million to QUALCOMM for patent licenses covering the second quarter 2007. Nokia and QUALCOMM have had patent license agreements since 1992 and Nokia's obligations to pay license fees under the old agreements partially expire on April 9, 2007.
Nokia said the payment announced today does not extend, and is not related to, the old agreement. Rather, it is based on the licenses that QUALCOMM has agreed and provided through the European Telecommunication Standardization Institute (ETSI).
"As we continue to negotiate the new cross-license agreement, Nokia views this payment as fair and reasonable compensation for the use of relevant Qualcomm essential patents in Nokia UMTS handsets during the second quarter of 2007. 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, chief financial officer, Nokia.
In response, QUALCOMM filed a demand with the American Arbitration Association, seeking a ruling that Nokia's continued use of QUALCOMM's patents in Nokia's CDMA cellular handsets (including WCDMA) after April 9, 2007 constitutes an election by Nokia to extend its license under the parties' existing agreement. QUALCOMM said such an extension would obligate Nokia to pay QUALCOMM the same royalty specified in the current agreement and prohibit Nokia from asserting patent claims against QUALCOMM's CDMA products. QUALCOMM also seeks a ruling that it is entitled to terminate all of Nokia's rights and licenses under the agreement if Nokia sues QUALCOMM for patent infringement after April 9, 2007.
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