Apple will “vigorously” defend itself against a Nokia patent infringement lawsuit, according to financial documents released Tuesday evening. The remarks are the first made by the Cupertino, Calif. company about a lawsuit by Nokia that could be worth up to an estimated $1 billion.
“The complaint alleges that these patents are essential to one or more of the GSM, UMTS and 802.11 wireless communication standards, and that the Company has the right to license these patents from plaintiff on fair, reasonable, and non-descriminatory (“FRAND”) terms and conditions,” Apple said in a 10-K filing with the Securities and Exchange Commission. “Plaintiff seeks unspecified FRAND compensation and other relief. The Company’s response to the complaint is not yet due. The Company intends to defend the case vigorously.”
In a complaint filed last week, Nokia accuses Apple of “attempting to get a free ride” off the Finnish company’s research efforts and not agreeing to licensing terms. Nokia alleges patent infringement covers iPhones since 2007 and includes GSM, 3G and Wi-Fi transmission techniques along with speech coding, encryption and security. Piper Jaffray analyst Gene Munster believes Apple is seeking a 1 percent to 2 percent royalty, or $6 to $12 for each iPhone sold.
Apple’s initial indications of a defense could stretch a one year patent lawsuit into up to three years, a mobile licensing expert told Reuters. “It’s not a David versus Goliath story,” Bill Merritt of InterDigital said. “These are two Goliaths.”
Nokia has seen the iPhone cut into its smartphone lead. Although still the No. 1 smartphone seller, Nokia has watched its lead shrink from 72 percent of smartphones to 50 percent of the handsets. Apple now has 14 percent of the smartphone sales, according to second quarter figures.
In related news, Apple told the SEC it is defending 47 patent infringement lawsuits – 27 filed just in 2009. The nearly 50 lawsuits “consume significant time and expense,” according to the company’s financial statement.