Nokia and InterDigital may be preparing to settle
When a patent dispute gets so entangled that the parties involved can't quite agree upon what it is that's in dispute, maybe it's time to call it quits. Today, two of the sides in a notorious three-way dispute admitted they're thinking about it.
The big question that remains up in the air today is this: Is Nokia a licensee of InterDigital technology or not?
Nokia thinks it was a paying customer of InterDigital's since 1999, for the use of various wireless technology patents. But the matter of which patents those are, whether they're valid, and whether Nokia owes anything for them if they are, has been one of the more confusing and unusual battles ever to come before the world's patent courts.
This morning, both sides have admitted to major press sources, including Reuters, that they have entered into settlement talks, in advance of an initial hearing before the US International Trade Commission on April 21. As it turns out, at this point in history, they may simply be willing to make that big question go away.
Back in '99, US-based InterDigital Communications began licensing patents from its portfolio to Nokia. Three years later, the relationship between them seemed so good that InterDigital granted Nokia "most favored licensee" status, which meant that the fees Nokia paid would be indexed based on the fees everyone else paid, to ensure it's getting the best deal.
Meanwhile, InterDigital was the defendant in an infringement suit of its own, brought way back in 1993 by Ericsson. That matter didn't really matter much to Nokia until 2003, when those two sides agreed to settle, and Ericsson entered into a contract with InterDigital for which Ericsson owed only $120 million for 2002.
That was apparently a better deal than Nokia was getting, so Nokia sought to intervene. A district court granted Nokia that unusual right, resulting in the creation of the Ericsson v. InterDigital v. Nokia case, quite literally. Nokia claimed it had the right to see the sealed contracts between the original two litigants.
InterDigital appealed, and that's when the relationship between it and Nokia fell apart. Nokia contested the validity of InterDigital's patents. A court of arbitration sided against Nokia in July 2005 Then in August, the Federal Circuit Court of Appeals handed another victory to InterDigital, saying Nokia waited too long to make itself an intervener in the Ericsson case.
Now Nokia found itself having to pay InterDigital royalties for patents that appeared to be valid, on terms pretty much set forth by InterDigital. In April 2006, they settled their terms...or so they thought. Nokia was under the impression that it was already released to sell its 3G wireless technology, while its settlement with InterDigital covered the 2G patents going back to 2003.
InterDigital disagreed, filing a complaint last August with the USITC saying Nokia had unfairly used two of its 3G patents for the Universal Mobile Telecommunications System (UMTS) without licenses. That's the case whose hearing comes up next month. To try to put away two birds with one proverbial stone, InterDigital added Samsung to its list of defendants in October, just to spice things up.
In an effort to break the logjam prior to April, Nokia filed what it characterized as a pre-emptive strike against InterDigital in UK court, claiming that the patents InterDigital claimed were critical to UMTS were actually not even related. Last December, Nokia was largely victorious, gaining a declaration that three of the four patents InterDigital claimed actually were irrelevant to UMTS.
Last week, a New York district court ordered InterDigital and Nokia to enter binding arbitration on the remaining matter. As recently as last Thursday, InterDigital said it was appealing that order. But this morning, it appears there may have been a warming up to the idea.
In its annual report filed with the US Federal Trade Commission last week, Nokia said it still plans to defend itself against InterDigital's claims...whichever ones they are.