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The real patent story behind Apple vs Nokia

Daniel Eran Dilger

Nokia sued Apple, now Apple is suing Nokia; both companies claim the other is trying to appropriate their own technology unfairly. But that’s not really the case at all. The real story isn’t even being reported.
Apple’s own press release only says that the company is countersuing Nokia over “stealing” 13 of Apple’s patents; Nokia originally claimed Apple had similarly infringed on 10 of its patents rather than doing its own innovative research. Digging deeper into Apple’s legal filings however, it becomes clear that all patents are not equal.

AAPL-NOKCountersuit

Pooling patents

It’s not a just case of Apple’s patents being better or more novel. Nokia says its patents are related to GSM and UMTS standards as well as 802.11 WiFi technologies. The problem for Nokia is that the company has already committed itself to license its standards-related patents using “fair, reasonable and non-discriminatory terms.”

When companies pool their patents into open standards as Nokia did, it can benefit the entire industry. It also benefits the contributing companies, who earn royalties on those patents as the portfolio of technology related to a given standard is licensed by other companies.

Without patent pooling within international standards bodies, each company would have to develop its own complete set of technologies without any of the benefits of sharing. There would also be less interoperability between products.

Pooling patents together from multiple companies also allows third-party companies to adapt and deploy technologies originally created by others. This creates competition through cooperation and benefits consumers. Companies like Nokia with expertise in wireless mobile technologies, and companies like Apple with expertise in multimedia and network computing, can combine their talents to create interoperable standards which third parties can license as a package.

Licensed broadly vs private innovation

Nokia, Apple, and many other companies have all contributed to pooled standards such as MPEG video, WiFi wireless networking, web standards, and mobile standards such as GSM and UMTS. Once they pool their technologies into a standard, their intellectual property is now understood to be available at fair and reasonable licensing terms to any company that wishes to use it and pay the established licensing fees, or in some cases, completely free and open.

After Nokia committed its ten patents to various mobile and WiFi standards, it attempted to discriminate its licensing terms against Apple. Due to the success of the iPhone, Nokia wanted more money from Apple then it gets from other licensees, and also wanted open access to Apple’s private portfolio of technology used in the iPhone.

While Apple has contributed a variety of its patented technologies to open standards which are licensed under “fair, reasonable and non-discriminatory terms,” it also has a variety of technologies that are not related to any open standards. These differentiate the iPod and iPhone, and are sold directly to consumers rather than being broadly licensed to other technology companies to use.

Patent discrimination

Nokia hoped to leverage its pooled patents to gain access to Apple’s private patents, patents Nokia had already began using in its own phones, a grossly hypocritical move after alleging that Apple had stolen its technologies because it wasn’t innovative enough to develop its own.

So this is not a case of tit-for-tat as virtually every report so far has suggested. It’s a case of Nokia, finding itself well behind the curve in mobile phones, attempting to extort unfair, unreasonable, and discriminatory licensing terms against Apple for patents which Nokia has already committed to license under fair reasonable and nondiscriminatory terms.

Why Nokia is suing Apple over iPhone GSM/UMTS patents

Another interesting take away here is that Nokia isn’t the only company stealing Apple’s technology. Pundits cheered when when Palm did it, and they’re giddy at the prospect of Android stealing more and more of Apple’s intellectual property.

And while the industry rags all complained that Apple was going to stifle competition in the industry by going after Palm, Apple didn’t. And earlier, when it was claimed that Apple had a “killer patent” it would use to destroy every competitor to the iPod… that didn’t happen either. and when pundits fretted that Apple would use its multitouch patents to kill innovation and smart phones… that didn’t happen either.

Why Apple’s Tim Cook Did Not Threaten Palm Pre
Apple’s Billion Dollar Patent Bluster
The iPhone Multitouch Patent Myth

Instead, Apple only responded to Nokia after that company launched a highly publicized assault on the iPhone, one which was celebrated and cheered on by Nokia’s fanboys and much of the technology press in general. Clearly, Apple prefers to win in the marketplace and is only using its patents defensively. So pundits, chew on that before scribbling up your next missive about how Apple may destroy the world via its patent holdings.

I’m still feeling terrible, although I’m beginning to heal, and I have successfully dictated my first article using MacSpeech Dictate, as I can’t really type. I’m feeling awfully lucky.

37 comments

1 rizzior { 12.11.09 at 12:26 pm }

My Best Wishes Goes Out 2u My Friend.
“Get Well Soon”

2 uberVU - social comments { 12.11.09 at 12:37 pm }

Social comments and analytics for this post…

This post was mentioned on Twitter by DanielEran: New: The real patent story behind Apple vs Nokia – http://tinyurl.com/ycnsv7s

3 lmasanti { 12.11.09 at 12:43 pm }

Is this paragraph correct? (suspected error in capitals)
“While Apple has contributed a variety of its patented technologies to open standards which are UNlicensed under “fair, reasonable and non-discriminatory terms,””

4 danieleran { 12.11.09 at 12:55 pm }

@lmasanti – yes, I missed the spurious “un.” I also have to figure out how to teach Dictate new words, as it wouldn’t ever get “Nokia” right: no Kia, gnocchi, and so on.

One takes for granted how great it is to have your body work until it doesn’t!

5 Jon T { 12.11.09 at 12:58 pm }

Well done – an article above and beyond the call of duty. Get well soon.

6 Berend Schotanus { 12.11.09 at 1:40 pm }

“I have successfully dictated my first article using MacSpeech Dictate”

Congratulations about that, well done!

7 Nokia vs Apple, Apple vs Nokia « Tapinja { 12.11.09 at 2:23 pm }

[...] vs Apple, Apple vs Nokia Daniel Eran Dilger van Roughlydrafted.com geeft zijn visie op de patentstrijd tussen Nokia en Apple. Waar ie wat mij betreft alvast gelijk in heeft is dat [...]

8 gus2000 { 12.11.09 at 2:44 pm }

I find as I age that tragic circumstances induce gratitude (“I am so fortunate it wasn’t worse!”)

Mmmmmmm, gnocchi. From the MacSpeech web site:

“Most speech recognition programs follow specific pronunciation rules for a specific language. In the case of MacSpeech Dictate 1.3, this is English. MacSpeech Dictate knows the approximately 80 phonemes that make up the English language and how letters combine within words to produce these various phonemes. However, foreign languages have different pronunciation rules. When you try to dictate foreign words that don’t follow English pronunciation rules, MacSpeech Dictate takes a look at the spelling and thinks the word should be pronounced one way, according to the rules it knows about, when in actuality the word should be pronounced differently. Foreign language terms or place names will always be problematic.

One solution for handling foreign words and proper nouns within MacSpeech Dictate would be to create a text macro. For the name of the text macro, use a short descriptive phrase comprised of common English words. ”

I know for a fact that you cannot teach a computer to understand the command “sit”. Mine does, however, respond to “stay”.

9 Nathan { 12.11.09 at 3:46 pm }

I have to say I think you are completely wrong. From what I read it sounds like Nokia has been trying to get Apple to just pay for their technology. But, since this is all speculation; since either company could be “lying” about it. I can’t say who is at fault.

As for Technology; I read through the first 6 patents that apple has listed. What a joke, a ton of those have been obvious or in use long before Apple patented it. Crimany, themes have been in use since the Amiga. The c64 had device detection on the serial bus. Digi board had mutliple io interface. In this specific case GSM patents vs Themes, I hope Apple gets smacked badly. It appears 12 (of the 13) patents never should have been granted.

As for inovation; actually Nokia has the Nokia 770 in 2005 which was a “touch” screen mini-computer. Even had multitasking. iphone wasn’t even announced until 2007. iphones claim to fame is ease of use, multi-touch and app store. They did a great job on those. But technology wise they were 2 years late.

Nathan

10 Ludor { 12.11.09 at 4:21 pm }

Thank you for this article. Quite a few Nokia fanboys in my surroundings, who need proper patronizing.

And may you heal swiftly.

11 KenC { 12.11.09 at 6:28 pm }

Get well, Dan. I’m impressed by MacSpeech, since I know you speak in great rushes of words. Must be hard for the app!

I thought the following bit of the filing was interesting:

On page 41, paragraph 82 and 83 are very interesting. There, Apple states that in May of 2009,

“Nokia demanded a royalty approximately three times as much as the royalty proposed the prior spring, which was itself in excess of a F/RAND rate, as well as “picks” to Apple’s non-standards-essential patents.”

So, if Apple is correct, then Nokia not only wanted a far higher royalty rate than they charge others, but that they wanted to leverage those patents to force Apple to cross-license some Apple patents that they wanted to use, and were already using. If correct, this is highly damaging to Nokia.

They wanted OVER TRIPLE the going rate!

12 enzos { 12.12.09 at 12:47 am }

Looks like a game of cat and mouse to me, with Nokia being the mouse. Poor buggers won’t know what hit them.

13 airmanchairman { 12.12.09 at 5:49 am }

Glad to hear you’re on the mend, and also that you’ve acted on the suggestion of many here (myself included) to try out dictation technologies as a positive use of your recent adversity.

Nokia’s real intention is not to excessively monetize their patent portfolio with regard to Apple – that’s possibly their fall-back strategy.

They are looking to secure worldwide (or at least in Europe where parochiality could ensure “home” support”) legal injunctions against Apple continuing to trade in iPhones while still infringing Nokia’s patents, much in the same way as NTP had RIM over a barrel a few years ago until they paid a hefty “ransom” to be released from the injunction and resume trading.

Nokia’s real intention is to thereby halt or hinder Apple’s evolutionary and revolutionary charge from their current dominating position where every competing handset vendor is “skating to the puck instead of where the puck’s gonna be when they get to the skater” (to quote the legendary ice-hockey champion Wayne Gretzky).

All this in the vain and forlorn hope that it will allow Nokia and its partners enough time to catch up technologically, or at the very least parasitically feed upon the various portions of Apple’s eco-system that make it such a formidable proposition to Nokia et al.

I would consider this very worrying if I were a Nokia financier or major shareholder – a sure sign of desperation and worse still, extreme poverty of ideas…

14 UPDATED: Apple Countersues Nokia – Patent Pugilism Has Begun! | iPhone Info { 12.12.09 at 9:49 am }

[...] 4: Roughly Drafted has a similar take to the [...]

15 eliotw { 12.12.09 at 2:11 pm }

Get well soon. I really enjoy your articles and insight. Please sell that damn bike.

16 UPDATED: Apple Countersues Nokia – Patent Pugilism Has Begun! « Everything iPhone { 12.12.09 at 7:53 pm }

[...] 3 & 4: Roughly Drafted explains in good detail a theory under which Nokia wouldn’t license their pooled patents to [...]

17 The Mad Hatter { 12.12.09 at 9:33 pm }

Intellectual Property is an Oxymoron.

Stay off the bike for a day or two :) Or we will crazy glue your feet to the pavement, so you can’t do this to yourself again. There aren’t very many writers who can think. You can, and we don’t want to loose you.

18 gctwnl { 12.13.09 at 5:56 am }

Is there a link to the text of Nokia’s orginal suit somewhere?

19 Apple countersues Nokia | The Apple Tech Blog { 12.13.09 at 6:28 am }

[...] Daniel Eran Dilger's The real patent story behind Apple vs Nokia [...]

20 tundraboy { 12.13.09 at 12:37 pm }

I always thought that what Nokia really wanted was a pass to use the smart phone- related patents that Apple owned and that Nokia needs to compete in the smart phone business. And this whole lawsuit against Apple was about building leverage to pry patent concessions out of Apple’s tightly held fist. Sorry Nokia, try again and harder. Or maybe try nicer.

21 Rich { 12.17.09 at 11:29 am }

“After Nokia committed its ten patents to various mobile and WiFi standards, it attempted to discriminate its licensing terms against Apple.”

[citation needed]

22 SteveS { 12.17.09 at 3:07 pm }

The reason Apple has taken a defensive posture against Palm is precisely because Palm has significant IP in this space as well that Apple is infringing upon. In short, a legal battle would be a no win situation (except for the lawyers).

@Nathan, no matter how you slice it, Nokia went after Apple first and they will learn the hard way that if Apple is to pay royalties for their 10 patents, Nokia will have to pay royalties for their 13 patent infringements. We could all very well claim that any of these patents (on either side) shouldn’t even be patentable, but they are and that’s all that matters. Nokia is going to come out the worse on this one. The worse case scenario for Apple is that they pay the small fee everyone else pays per unit. Apple will be able to do the same for Nokia plus more as Apple’s patents aren’t pooled.

As for touch screens, Apple never claimed to invent the touch concept anyway and if you’re going to cite prior work, then Apple’s Newton clearly predates anything of that sort from Nokia. Even Nokia isn’t dumb enough to try to make that sort of argument, so why are you going there?

23 Nathan { 12.17.09 at 6:27 pm }

@SteveS – Nokia may not have gone after Apple first; it very well could have been Apple didn’t want to pay the royalties that were standard for smart phones. We don’t know, thats the point.

As for the worth of the patents, pretty much everything from the Wifi connection, GSM, and 3G connection is pretty major hit vs their specific serial detection. Notice Apple only mentioned a few phones that had issues; meaning it probably is easy to work around.

As for inventing touch screens; I wasn’t even going their — I played with a Newton. I was answering a prior poster saying that Nokia was following the iPhone success, when in all reality they had a comparable product on the market a couple years before the iphone was even released.

24 The Mad Hatter { 12.17.09 at 7:35 pm }

As for inventing touch screens; I wasn’t even going their — I played with a Newton. I was answering a prior poster saying that Nokia was following the iPhone success, when in all reality they had a comparable product on the market a couple years before the iphone was even released.

Now that’s an interesting allegation. Recently I bough an IPhone, after having done a lot of research, including comparing every phone available in Canada (including unlocked phones). If Nokia has a comparable phone, I did not see it. I did see two phones that were somewhat comparable, the Palm Pre, and the Blackberry Storm. But only somewhat. The Storm’s software isn’t as good, and while Palm’s software is as good, it has a tiny keyboard, which is a real turn off for me (I have large hands).

So what is this “comparable” Nokia device? Put up a link, so we can see for ourselves (and if you don’t know how to put up a link, ask, I’ll be happy to teach you how).

25 Nathan { 12.17.09 at 8:30 pm }

@TMH -
Time Line:
Nokia 770 – May 2005
Nokia 800 – Jan 2007
Iphone – July 2007
Nokia 810 – Oct 2007

the Nokia 770 (2 years before iphone) , N800, N810 in the same period. (http://en.wikipedia.org/wiki/Nokia_770_Internet_Tablet, http://en.wikipedia.org/wiki/Nokia_N800, and http://en.wikipedia.org/wiki/Nokia_N810.

They were full mini computers with Skype ability. The N810w was the first of them to have a _4G_ connection. The n900 (which just came out) is the first of them to also be a conventional phone.
Technology wise the Nokia 770 has things even the 3gs doesn’t do still. (800×480 screen, multitaskings, etc).

I didn’t want to start a tech war; I was just answering the charge of Nokia following Apple. Other than Multi-touch Nokia actually had everything and more pre-iPhone. They just REALLY suck at marketing, where Apple rules. And Nokia has next to no presence in the North America , where Apple has a nice cult following. But Tech wise; Nokia is past them. Even the new n900 has things that are missing on the iphone.

http://www.wikivs.com/wiki/IPhone_3GS_vs_Nokia_N900
Is a good source to see the differences in of the two models.

My biggest issue with this blog post; is it is all speculation written as if it is facts.

Nathan
P.S. I don’t have a iphone or n900. Just hate mis-information.

26 MetalboySiSo { 12.18.09 at 9:06 am }

@Nathan

If I’m reading what you’re saying correctly:

“Nokia may not have gone after Apple first….”, etc.

They must have, otherwise Apple couldn’t be *counter*suing Nokia. Just a thought.

27 MetalboySiSo { 12.18.09 at 9:07 am }

Sorry for the double post – I also meant to say:

Daniel, hope you get yourself healthy again soon, guy. Best of luck to you, and Happy Holidays, as well.

28 Nathan { 12.18.09 at 10:37 am }

@MetalboySiso

If Nokia tried to negotiate the same with the same pricing structure as they do with Motorolo, LG, RIM, HTC, etc and Apple decided not to pay licensing then it was Apples fault.

If Nokia tried to use unfair licensing (as suggested by Daniel) then it would be Nokia’s fault.

We are on the sidelines; guessing. Assigning blame without knowing the facts is just plain stupid. Looking at the information presented so far (press releases and lawsuits); it would “appear” to me that Apple is the party at fault. But again we are on the sidelines; their is no easy way to assign blame with the current information.

However, Nokias patents have been tested and are quite strong, and deal with major parts of pretty much all GSM based phones. Apples have not been tested and based on reading several of them are pretty dang whimpy, and can be worked around fairly easily. (Remember a patent details a “method” to do something. If you do the same thing another way; it isn’t covered under the patent). GSM, WIFI, 3G patents have to be followed for interoperability — no way for Apple to work around it. So just based on the patents, Apple is pretty screwed.
Nokia released new firmware for a couple phones and they are done.

Apple would fight to the end if they thought they could win; if I had a guess based on the information so far presented, Apple will cave and pay an unmentioned settlement, cross license patents, pay licensing and then admit no wrong doing (which we all know what that really means).

Nathan

29 gctwnl { 12.18.09 at 10:47 am }

Apple says Nokia’s demands are not fair and reasonable as they are obliged to be. Apple does not say they do not want to pay.

My guess is that Apple would not argue this unless they had a strong case.

It definitely looks to me like Nokia tried to muscle in on Apple’s ‘non-essential’ patents. I’d like to read Nokia’s suit somewhere. Is it available?

30 airmanchairman { 12.18.09 at 10:56 am }

The full description was ” not F/RAND”, i.e. not (F)air, (R)easonable (A)nd (N)on-(D)iscriminatory – this is a common term in patent litigation. It seems to point to the possibility that Nokia was making more than the usual licensing and cross-licensing demands of Apple with regard to their patents.

All will now be revealed in court if a settlement cannot be reached before it gets that far.

31 gctwnl { 12.29.09 at 3:39 am }

@Natahan: The iPhone does have multitasking, the iPhone runs OS X after all and that is based on a fully multitasking kernel. But as far as I know, Apple limits access to multitasking, mainly for battery life and probably also for performance (I’d rather not see swapping on the phone).

Apple has made a few explicit design choices because of battery life and performance and one of those is to limit multitasking. So people can complain: the iPhone does not have multitasking (which is technically incorrect), but others could say: they have such an such battery life at such and such a form factor and functionality. You cannot look at these choices separately, they are interrelated.

Still: does anybody know where to find the text of the Nokia suit?

32 Nathan { 12.29.09 at 9:18 am }

@gctwnl — I know the iphone technically supports multitasking, in fact from stuff I’ve read if you jail break your iphone you can get an app to enable multitasking. And the choice to limit “multitasking” to save battery & to eliminate task switching confusion was their choice, the only point I was trying to make was that nokia 770 which was two years before the iphone and it had allowed multitasking. Technology wise; Nokia was NOT following the iphone; they were on the scene two years before them and still have a technology lead in several areas with their n900.

New Disclaimer: my wife just got me a n900 for Christmas, since it matches my ideology — I want full control over the apps I run (I’ve been using Computers since Apple/Commodore days — I run what I want to). I’ve already installed truecrypt, NTFS (windows file system), cifs (windows/samba file sharing), Keepassx (encrypted password db), vnc (linux/mac remote control), rdc (windows remote control). So now my phone can access my entire media and documents on my home server via file share rather than just a web interface, has encrypted disk support (that all my computers can work with) to keep all important documents private, supports windows files systems, has vnc and rdc to remote control computers. Fully Multitasking and lasting over a full day of use — I am very happy with this device.

33 Nathan { 12.29.09 at 11:39 am }

Something you all might be interested in; see the Nokia site for the full press release. Another shoe has dropped…

“Nokia announced it has today filed a complaint with the United States International Trade Commission (ITC) alleging that Apple infringes Nokia patents in virtually all of its mobile phones, portable music players, and computers. ” (The release goes to say that this action is not related to the lawsuit)

The ITC can make Apples life miserable if they side with Nokia on the complaint. (Like baring sales of any infringing stuff in the US)

34 CCS { 01.01.10 at 11:33 am }

@Nathan:
>The ITC can make Apples life miserable if they side with Nokia on the complaint. (Like baring sales of any infringing stuff in the US)

I don’t know. All those government folks love their iPhones…

35 blouis79 { 01.03.10 at 7:23 am }

I understand the ITC is set up to stop imports hurting US businesses. It’s hard to the the ITC defending Nokia over Apple when Apple owns all its IP in USA. (Can’t find any details of the ITC case.)

36 kiers { 01.04.10 at 8:25 am }

excellent article, and indeed series as well. The financial figures and facts speak for themselves free of any partisanship. Apple has eaten Finland, and they (Nokia) are out of options.

For the record, I have a ($500 at the time!) unlocked Jokia N95-1, purhcased in US. It is a BRICK. I can’t load a simple 4GB SDHC card with MP3s and expect it to last more than a week without data CORRUPTION, and consequent losing all my photos and other stuff on the card as well. Nokia symbian can do NOTHING about it despite latest firmware. Even their authorized repair center will admit to this. Imagine $500 and not even an mp3 tunes! NEVER AGAIN NEVER.

37 » Nokia v. Apple 2: Electric Boogaloo Student Intellectual Property Society { 02.02.10 at 7:44 pm }

[...] adroitly covered the issue, noting “this is not a case of tit-for-tat,” and that what’s really at [...]

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