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Heading off another legal battle, Nokia (News - Alert) said it has paid Qualcomm $20 million for patent licenses covering the second quarter 2007.
Nokia and Qualcomm (News - Alert) have had patent license agreements since 1992 and Nokia's obligations to pay license fees under the old agreements partially expire on April 9, 2007. The payment does not relate to the existing agreement but is based on licenses Qualcomm is providing through the European Telecommunication Standardization Institute (ETSI).
By agreeing on payment for the UMTS patents, Nokia and Qualcomm avoided escalating the ongoing patent dispute that has existed between the companies. Nokia has contended it should pay lower royalties for its licensing of Qualcomm’s patents.
"As we continue to negotiate the new cross-license agreement, Nokia views this payment as fair and reasonable compensation for the use of relevant Qualcomm essential patents in Nokia UMTS handsets during the second quarter of 2007,” said Rick Simonson, chief financial officer, Nokia, in a statement. “Nokia believes that Qualcomm's patent portfolio is concentrated in the United States, and that it has few or no alleged UMTS patents in many of the countries in which Nokia has substantial UMTS handset sales. When Qualcomm's early patents become paid-up and royalty-free on April 9, 2007 Qualcomm's share of all patents relevant to Nokia UMTS handsets will significantly decrease", Simonson added.
Nokia has until 2007 paid less than 3 per cent cumulative license fees under all of its patent license agreements involving WCDMA products.
Nokia believes it is well positioned to offset any claims Qualcomm may make against Nokia products to claim more money in license fees.
"It is important to note that as of April 9, 2007, Qualcomm's entire chipset business becomes exposed to Nokia's extensive GSM, WCDMA and CDMA patent portfolios and Nokia will use all rights from those portfolios when defending itself against any new Qualcomm litigation", Simonson added.
Spencer Chin is a contributing editor for TMCnet. To see more of his articles, please visit his columnist page.
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