Qualcomm rejects $20M Nokia payment

Qualcomm has rejected a $20 million payment from Nokia for royalties on patented Qualcomm technology, snuffing out a possible resolution of part of the companies’ ongoing intellectual-property dispute.

A series of long-term licensing agreements between the companies expired on Monday. Nokia said last week that it had paid Qualcomm $20 million to cover licenses for 3G mobile phone technology through the end of the current quarter on June 30. However, the payment was not to extend the deal that expired Monday, Nokia said.

Qualcomm told Nokia on Wednesday that it had turned down the money “and the accompanying multiple pages of terms upon which Nokia conditioned its payment,” Qualcomm said in a press release.

“Both the amount of the payment and the terms that Nokia sought to unilaterally impose in connection with it are at odds with the parties’ 2001 license agreement,” Qualcomm said.

The companies are battling in court and the media over Nokia’s licenses to use technology developed by Qualcomm, the San Diego company that pioneered CDMA (Code-Division Multiple Access) and sells chips using a wide variety of mobile technologies. Last week, Qualcomm sued in the U.S. to stop Nokia from selling GSM (Global System for Mobile Communications), GPRS (General Packet Radio Service) and EDGE (Enhanced Data Rates for GSM Evolution) phones because it said those products infringed on Qualcomm patents. The company said it has similar suits in progress in the U.K., France, China, and other countries.

The two companies seem to interpret the $20 million payment in different ways.

Nokia said Thursday that the $20 million offer was a testament to its commitment to continue negotiating in good faith. It was for possible future use of some Qualcomm patents licensed through the ETSI (European Telecommunication Standards Institute) for the rest of this quarter, spokeswoman Laurie Armstrong said.

Qualcomm called it one of several acknowledgements by Nokia that it continues to use the patents and has to pay for them.

“I think it amounts to an admission that they continue to use our patents,” Qualcomm General Counsel Lou Lupin said in an interview last week. “If they are, and they don’t abide by the terms of our agreement, then they’re unlicensed and infringing. Under U.S. law, that’s willful infringement, and the finding in the U.S. could be triple damages and other remedies and attorney fees.”

In rejecting the payment, Qualcomm said Thursday said it represents just a fraction of the royalties to which Nokia has agreed and of the value of Qualcomm’s patent portfolio.

The two sides continue to talk, said Derek Aberle, senior vice president and general manager of Qualcomm’s licensing business, in an interview Thursday.

“We remain far apart, and we’ve got some significant differences of opinion at the moment,” Aberle said.

(Nancy Gohring in Seattle contributed to this story.)

This story was updated on April 12, 2007