San Diego Union Tribune

December 13, 2007

Qualcomm loses patent decision to Nokia

Judge: Infringement law wasn't violated

WASHINGTON A federal trade judge yesterday ruled against Qualcomm in a patent dispute with Nokia, depriving the San Diego chip maker of additional leverage to use in a separate, more far-reaching dispute between the two companies.



Administrative Law Judge Paul J. Luckern rejected Qualcomm's complaint, filed before the U.S. International Trade Commission, which alleged that Nokia infringed on three Qualcomm patents used to control signal power to avoid dropped calls.

Luckern said Nokia, the world's largest mobile phone maker, did not violate a trade law prohibiting the import of goods that infringe on others' patents. He said Nokia did not infringe on two of the contested patents, while a third patent was invalid.

Qualcomm had asked the ITC to ban the import of Nokia wireless devices using global system for mobile communications, or GSM technology, which Qualcomm said infringed on its patents.

Qualcomm plans to petition the ITC to review Luckern's decision, the company said. The ruling could be changed by the full commission, which has set a review deadline of April 14.

Analysts said yesterday's decision could be seen as a plus for consumers, since a trade ban would have reduced the availability of some cell phones.

They said Qualcomm was hoping for a win to increase its leverage over Espoo, Finland-based Nokia in a dispute over a cross-licensing agreement that expired in April.

Among other items, the two companies cannot agree on how much Nokia should pay Qualcomm for a new generation of chips.

Michael Cohen, an analyst for Pacific American Securities in San Diego, doubts the ITC will reverse Luckern's order.

I don't expect Qualcomm to cave in here, so I think what this means for investors is we probably have a long wait before there's some sort of resolution in the dispute between Qualcomm and Nokia, he added.

In a statement, Qualcomm pointed out that the judge's decision does not address the company's wideband Code Division Multiple Access technology, an advanced technology that increases the speed at which handsets can transfer data from the Internet.

Nokia applauded the judge's initial determination and said it hoped it boded well for other cases pending between the two companies.

The ITC posted the decision after the close of regular trading. Qualcomm shares, which had risen 83 cents to $41.01 during the trading day on the Nasdaq, fell 81 cents in after-hours trading.

Nokia, traded as American Depositary Shares on the New York Stock Exchange, rose 54 cents to close at $39.55 during regular trading hours. The stock was unchanged after hours.

Reuters contributed to this report.