Nokia has accused Apple of infringing on 10 of its technology patents with its iPhone, and Thursday filed a lawsuit seeking unspecified compensation.
Both companies declined to comment.
In the lawsuit, filed in the U.S. District Court in Wilmington, Del., Finland-based Nokia said that the wireless data patents, which cover speech coding, security and encryption, are infringed upon by all Apple iPhone models shipped since the iPhone was introduced in 2007.
"Apple's wireless communication devices take advantage of the decades of continued investments made by Nokia to build today's communications protocols," the company alleges in the complaint. By refusing to compensate Nokia for its patented technologies, Cupertino, Calif.-based Apple is attempting to get a "free ride" on the billions of dollars that Nokia has invested in research and development, Nokia alleges.
Prior to the filing, Nokia said it made various attempts to talk to Apple about patent license agreements and royalty rates. Apple, however, rejected its offers and refused to compensate Nokia for use of its technologies, Nokia said in court documents.
"[Apple's] failure to pay for use of patents in its products at the time of their sale allows it to charge less for its products because it does not have to recover the costs of the development of the technology used in its devices," Nokia claimed. "This allows it to obtain market share that it would otherwise not be able to obtain were its products to bear the costs for the patented technology. Nokia products in turn must bear the costs of the development of the technology that allows them to function in compliance with the relevant standards. This puts Nokia in a competitive disadvantage to 'free riders' such as Apple."
Nokia already has license agreements including these patents with approximately 40 companies, including virtually all the leading mobile device vendors, the company said in a statement.
The company alleges that Apple is also "contributing to the infringement of one the patents by others in the U.S. by the activities of end users of their products."
Nokia said that even if it wins the case, Apple will still profit from its technology.
"Even if Apple were to subsequently pay past due royalties, it would still enjoy a market share it otherwise would not have but for the period of 'free riding,'" Nokia said in the filing.
Piper Jaffray analyst Gene Munster said that Nokia may ask for royalty payments of 1 percent to 2 percent on every iPhone sold, according to a report by the BBC. Taking into consideration that Apple has sold over 30 million iPhones, the BBC said that the figure translates into approximately $6 to $12 per phone, or a total of roughly $400 million. However, Munster said that even if Apple were forced to pay such damages, it would not change his positive view of the company.
Shaw Wu, an analyst with Kauffman Brothers, also weighed in, and agreed that the brouhaha will have a negligible effect on Apple.
"I really think this is more a function of Nokia trying to compete with Apple more than anything, even if it's through the courts," Wu told the Wall Street Journal. "It's a non-event for Apple. It's immaterial even if they pay a lump sum."