We're not paying up yet, Nokia tells InterDigital
By Keith Dyer, Edtor, Mobile Europe
Nokia has reacted to a ruling from the International Chamber of Commerce’s Court of Arbitration by saying it may not pay up royalties that the Panel said are due to InterDigital Communications.
InterDigital and Nokia have been in dispute since 2003 over the royalties due to Interdigital for technology in Nokias 2G and 3G handsets and infrastructure.
On Friday 1 July the ICC's Court of Arbritration ruled, in a two to one majority decision of the arbiters, that Nokia owes Interdigital $112 million for the period from January 2002 through to December 2003. Interdigital says that by the terms of this award, Nokia will also owe up to $140 million for the period from January 2004 to December 2006, dependent on Nokia's sales volumes.
But now Nokia has said it is not convinced that the award is enforceable, and has told Mobile Europe that InterDigital's decision to pursue enforcement of the decision in the US District Court for the Southern district of new York is "premature".
The dispute also affects Samsung, which is in negotiation over license payments with InterDigital. InterDigital is likely to set its sights on a similar deal with Samsung, which is due to have its case heard in arbitration in October 2005.
Meanwhile, Nokia's view is that the dissent of the third arbitrator, who "raised significant issues regarding the enforceability of the decision " gives it a case to either modify the decision or even strike it out altogether.
Riita Marb, a Nokia spokesperson, said that her company was "evaluating all the options ", one of which would be for the company simply to refuse to pay the royalties.
"The process is a set process, she said, in which through negotiations and discussions held in good faith there is the possibility to modify or vacate the award. It's premature, and a precipitous move, to talk about enforcing payment before that process. "
Marb also said that InterDigital's estimates of future payments likely to fall due were also "premature until this decision has been enforced and discussed".
InterDigital is having none of that, however, and Janet Point, senior director of investor relations, told Mobile Europe , "We think there is a fairly straightforward way to interpret the agreement, and so have filed an action to enforce the decision."
"We couldn't speak for their [Nokia's] interpretation, " she said, but we have gone through it and believe it is straightforward and will take action to enforce the binding decision of the Arbitrators. "
The dispute relates to a patent licensing agreement originally made in 1999, which has fallen into two basic periods. The first, up until the end of 2001, saw Nokia pay $31.5 million to InterDigital. But in March 2003 InterDigital made a deal to license to technology to Ericsson and to SonyEricsson. Under the terms of its deal with Nokia, any agreement InterDigital made with other companies would also affect the terms of the Nokia agreement, going forward from that point. Nokia was unhappy with InterDigital's evaluation of Nokias payments and in July 2003 started proceedings which ended up in the Arbitration's award last Friday, 1 July.
In fact, the Panel's award was less than half that which InterDigital had set, which pleased Nokia. The difference in estimates, Janet Point said, came about because of the difference in Nokia's market position between the time of the Ericsson and SonyEricsson deals and now.
To place awards of $112 million and up to $140 million in context - InterDigital Communications Corporation turned over $103.7 million in 2004, reporting a net income of $100,000. It will have an evidentiary hearing about a license dispute with Samsung, in which the Korean company is also asserting its favoured licensee status, in October 2005. Samsung's case is likely to be bound up with the Nokia decision, as InterDigital itself acknowledges.
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