RSSNokia lawyers up, chooses to fight Apple in court rather than the market
By Carmi Levy | Published October 26, 2009, 7:16 PM
If timing is everything in business, Nokia apparently didn't get the memo. Apple's iPhone has been on sale for about 28 months now, but only last week did Nokia file a wide-ranging lawsuit in Delaware District Court that covers no fewer than ten alleged patent infringements.
This isn't anything new in the tech industry. In a business where intellectual property accounts for a disproportionately huge slice of any given product's value proposition -- and ultimately its market success -- fights over who came up with what idea first are common. For example, Research in Motion has paid out over a billion dollars over the last three years to settle two significant patent lawsuits that, if left unresolved, could have shuttered its popular BlackBerry devices for good.
Sue me -- it's the in thing to do
Of course, RIM isn't alone. Tech companies of all stripes are often forced to fight off lawsuits that may or may not have merit. For example, Apple, Belkin, Best Buy, Dell, HP, Intel, Netgear, and Sony are part of a group of 22 hardware vendors and retailers who were sued for patent infringement in 2007 by Wi-LAN.
The Ottawa-based Wi-LAN, which in 1994 was awarded patents for orthogonal frequency division multiplexing (OFDM) technology, claims 802.11-based solutions that have been brought to market since that time have inappropriately used Wi-LAN's IP. The company is targeting firms that incorporated 802.11a- and g-based technology into its products, which were then sold to customers, along with companies had anything to do with the supply chain. Wi-LAN, which last year added a few more plaintiffs to its lawsuit and has also claimed that its technology also forms the basis for 802.16a and WiMAX standards, is no stranger to the process: It's been suing various tech companies, including Cisco, since at least 2000.
While I support any company's right to actively defend its investments in developing new technologies and bringing them to market, there's a fine line between fighting for what you believe in and building a business case for organizational growth that's based largely on the pursuit of settlements and awards as a substitute for bringing actual products to market.
So as I look at Nokia's latest legal salvo, I'm left wondering if this marks the company's first tentative step toward a slippery slope where litigation -- not innovation -- defines its corporate culture.
A legal solution to sinking market share?
Nokia, like Wi-LAN, isn't exactly riding high in the market these days. Its US market share, which was once a healthy 35%, has shrunk to 7% and shows no sign of turning around. The company has also seen its global-leading market share slip thanks to a stodgy product lineup and a smartphone pricing model that seems to suit high-end PCs better than mobile devices. It missed the industry's transition from basic cell phones to smartphones and in doing so has ridden its budget devices down the one-way escalator to the basement while Apple, RIM, and a gaggle of Google Android-following vendors have captured the market's attention. Its mobile OS roadmap is all over the map, and its Ovi Store online app market is a lame duck afterthought that reinforces just how much Nokia still doesn't get it.
If Apple is the jock, RIM is the super-nerd, and Google is the cool new kid everyone's talking about, then Nokia is the doddering grandpa of the bunch.
From where I sit, Nokia's decline has sown the seeds for this latest lawsuit. Because if it had read the tea leaves correctly and recognized that data was the new voice for today's mobile market, it wouldn't have the time or the inclination to divert resources away from its core business. Nokia came to dominate its landscape because it delivered the right cell phones at the right price to a global market that a decade ago couldn't get enough of their newfound ability to talk on the go for cheap. But as voice-focused handsets evolved into data-centric, fashion-forward pocketable computers, Nokia kept pumping out the same old handsets. Sure, some of its N- and E-series smartphones looked great on paper, but scant carrier support and scandalous up-front purchase prices kept them from making much of an impact.
Not a troll. But reminiscent of one.
Which leaves Nokia in the sad position of suing the most obvious target in the hope of winning something in court that it couldn't win out in the real world. Forced to make up billions of dollars in lost revenue, it turns to lawsuits for what it apparently hopes will be a new form of revenue stream. I hesitate to call Nokia a patent troll, because it actually is in the business of designing and selling actual products. But this is the kind of lawsuit that gets real patent trolls kicked off of the invite list to the luxury box at the baseball stadium, and I suspect Nokia will soon find itself in similar straits. You don't make friends this way.
And even in a perverse universe where such behavior is applauded, lawsuits like this are a drain on corporate productivity, even for companies as large as Nokia. And even if Nokia itself manages to keep its employees focused on the task of building and marketing sellable stuff while this lawsuit plays out, the rest of the market -- including customers, members of the supply chain, and the media -- won't necessarily follow suit. While Nokia will try to get all of its stakeholders to focus on whatever great new offerings it has coming, everyone else will be wondering how the company's newest legal adventure is faring. This isn't how good buzz is created.
In the grand tradition of the American tech market, litigation will always loom large as a potentially viable business plan for companies that couldn't make things fly otherwise. Even as it struggles to keep pace globally, Nokia remains a potent force in mobility, and it's not like it'll disappear from our midst if this lawsuit fizzles. But Nokia's repeated failure to connect with American consumers has clearly reached a point where the mothership finds itself willing to lash out at its competitors in any way it can, in a belated effort to keep them in their sights.
This is not how leading companies behave. And it's not how wannabe-market-leaders convince the rest of us otherwise.
Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.
http://www.promdressonsales.com/
http://www.weddingdressart.com/
http://www.dresses4dancing.com/
http://www.dressupinyou.com/
http://www.hidresses.com/
http://www.digdress.com/
http://www.promdress2go.com/
http://www.promdress2u.com/
Score: 0
|Cool people don't use Nokia's, LOL
Score: 0
|I suspect this to be about an as yet unreleased handset or concept by Nokia and Apple having filed iPhone patents that infringe Nokia's existing patents around the areas that the unreleased handset will be using
Score: 0
|it's rare to even see any sort of Nokia cell phone in the U.S.A. Which is probably why the immediate reaction to this article is that Nokia is trying to fight back via litigation.
Yet it seems that Nokia is still front and center in the cell phone business in the rest of the world, just not here. Which leads me to believe that this fight may not be a patent troll, desperate move. Like HornyToad says we'll have to wait and see what the courts say.
Score: 0
|"it's rare to even see any sort of Nokia cell phone in the U.S.A."
Gotta ask where you are, because the majority of the "personal" phones here in the office are one variety of nokia or another. Heck, they are the only phones the guy in the office across from me will even consider...which is kinda sad (not to mention a bit fanboy-ish).
Nokia sells a lot more than just the high-end. The majority of their sales, if I am not mistaken, come from the "plan freebies" (the cheap phones). Maybe they ship 'em all to the midwest?
Score: 0
|Here in New Mexico LG or Motorola are the most common phones I see for personal use. I don't think i've seen a Nokia phone since the days of their cheap 99 cent candybar phones that can light up a bathroom and that was a good 6 years ago!
Score: 0
|Really?? Why do we even have patents and copyrights??
Get rid of them ALL!!! and watch the flood of iPhone clones come from China. Ya.. The same children that make the current iPhone in the day can make the same unit at night for less cost and put the same software with the same hardware..
Lets not forget Apple is the first company to call in the Lawyers..
Score: -1
|Mr Levy seems to forget that Apple itself hasn't always been as successful as it is today, and has in its time indugled in the very "tactics" Nokia is being accused of in this article. Let the courts decide on the merit of this case. We may learn something along the way... Nokia has been on top of the mobile, then smartphone, game for years. As such, it's been considered as top dog by most of its competitors, who sought to bring it down, but repeatedly failed. Maybe it's the European in me speaking, but Apple is a relative newcomer on this market, and as a Mac-user, I'm quite glad they became so successful so quickly, but let's face it: all smartphone makers nowadays use more or less the same technology (same logic boards and chipsets, same screens, same processors and memory), buy their components from the same suppliers, and then have to make a decent profit selling their overpriced products on markets so bored with this technology that they won't even look your way if you don't reinvent the wheel with each new release. Apple's iPhone is one of a kind, has been from the start, but is now facing a harsher competition. Nokia, on the other hand, has been active in more numerous segments of the cellphone business: they make cell-towers and servers, and various other hardware related to their core activity. They have patented countless technologies in their 40+-year existence, and have probably been plundered a couple times.
As I said, let's give them the benefit of the doubt and see what the court says...
Score: -1
|Ahh, Betanews and their viewpoints.... Every day deeper, even worse than before....
Nokia make the best smartphones today. The rest is blah blah. Apple made a good move three years ago, but Nokia is the leader over RIM, over MS and of course, over Apple.
The only place in the world were Nokia is not leading is in the US, where marketing pushed the market over value.
Instead of choose to develop and make better products, the rules in the US make the companies to push anything they have with marketing, they are able to sell a expensive bad product instead of a good one spending all the money in... marketing (no names here, pick your preferred). unfortunately this is not new or just for IT, everything seems to move that way...
Score: 0
|Sorry, I have to disagree with the basic angle of the article, which is summed up with Nokia being "in the sad position of suing the most obvious target in the hope of winning...", and given that it's a week later than this...
http://www.rgbfilter.com/?p=2152
strikes me as ill-informed. Nokia was in negotiations with Apple for a long time before taking the lawsuit route. It was Apple's decision to NOT pay the licensing fee. It's also clear from articles from last week that just about every major vendor in the business is paying Nokia licensing fees, because they have built so many of the fundamental technologies on which cellular communications are based.
I'm no Nokia fanboy, but when everyone else is paying them their fair share, and Apple decides NOT to, it's less akin to being a patent troll. It's more like Apple acting like a film maker who thinks he can use music in his film without paying for it.
Score: 1
|You're completely wrong on this one, you don't seem to have done any research whatsoever. While I haven't read any of the comments below yet, no doubt a lot of them are Nokia bashing too. I have an iPhone and I love it and I loved my iPod. But ffs do some research first and then re-write your story based in fact. [tsk]
EDIT:
____
Thank God all the comments aren't Nokia bashing and are sensible comments.
Score: 0
|"Apple's iPhone has been on sale for about 28 months now, but only last week did Nokia file a wide-ranging lawsuit in Delaware District Court "
Perhaps...and this is just a guess here, they were busy making sure it was a case they could....win?
Because it's not like they can compete, right? Being that they only sell more phones than any other manufacturer in the world...oh, wait....
Carmi, get a grip.
Score: 2
|"And it's not how wannabe-market-leaders convince the rest of us otherwise."
Hm, you're talking about Apple now, right? Cause last time anyone checked, Nokia was still the worlds largest phone maker. Yeah, that's right, smartphones are still not mass market, and the US is still not the world. You'd think a Canadian would know at least...
Score: 1
|This is cool. As usual there's nothing new here, Apple stealing others' innovation!
Score: 3
|"Not a troll. But reminiscent of one."
Hello pot, this is kettle :)
Score: 0
|Hmm. Interesting viewpoint. From what I've read about the lawsuit, Nokia has been trying to get Apple to license their infringing technologies for a while but recently, Apple decided to shut it all down, they simply didn't want to pay for them or at least, not at what Nokia was asking for them - keep in mind that Nokia licenses these technologies to other companies. So then...is Apple too good to license technology? They claim that everyone steals or copies them, they lockdown everything with their own wide, grabby patents but they're not willing to rightfully pay others? Bad Apple.
Score: 6
|Carmi, I guess you didn't read what Nokia says.
They say others pay for these patents to use, so should Apple.
They also say they contacted Apple and they had been in taks. We don't know when these talks started and when they ended. It is not like Nokia waited for 28 months and then sued Apple.
Score: 6
|*Sigh*. Yet another Levi piece that needed a couple more Google clicks before it went to the bakery. Some might assume this was an intentional hatchet job but I haven't given up on Mr. Levi yet. (I HAVE given up on Wilcox, a Microsoft propagandist who has no place on this site.) But despite the incomplete reporting there is some hard truth to be found:
"The company has also seen its global-leading market share slip thanks to a stodgy product lineup and a smartphone pricing model that seems to suit high-end PCs better than mobile devices. It missed the industry's transition from basic cell phones to smartphones and in doing so has ridden its budget devices down the one-way escalator to the basement while Apple, RIM, and a gaggle of Google Android-following vendors have captured the market's attention. Its mobile OS roadmap is all over the map, and its Ovi Store online app market is a lame duck afterthought that reinforces just how much Nokia still doesn't get it."
Without a doubt, Nokia has dropped the ball about as badly as you could ever hope to. There's time yet to reverse the slide..but the clock is ticking. I still love S60 but I've watched more features being yanked with every new device. I fear this is a company without a rudder, but with Maemo and some common sense they might be on the right track. Nevertheless, we can't hold Nokia to a different standard than every other company.
Score: 0
|Nokia should just let Apple use it's technology for free. Why defend 20 years of innovation and 40 billion euros in investments. Once Apple gets freeride other licensees will also stop paying Nokia. Then they will stop paying for all other GSM licenses as well. Why should they pay Ericsson and Qualcomm for GSM patents after Nokia lets them have them for free. No worries though, our data and voice will travel by the means of fairy dust and elf magic, once the whole development structure of GSM falls.
Or maybe the awesome Apple will start developing wireless technology after it can't steal it anymore.
It's also perfectly logical to compare Nokia to patent trolls. Nokia just patented few general ideas and waited for others to implement them. Nokia hasn't manufactured over billion GSM phones nor has it's network business ever built any mobile networks, nor have they been key developers in all stages of mobile network technology. They have just lazyly sat on their asses since late 80´s. This is why they shouldn't defend their IP.
Also, leading companies never defend their property. It's bad for buzz and no way to make friends. Better to just lit a joint and let everyone steal what they want.
Score: 2
|