A legal battle between Apple Inc and Nokia over patent infringement is likely to last for more than a year, said Bill Merritt, the head of mobile licensing firm InterDigital.
Nokia dominates the global handset market, but it has lost ground to smartphone entrants like Apple, which has become one of the top handset vendors. It's not a David versus Goliath story, these are two Goliaths, Merritt said.
Nokia filed suit in the United States last week, saying Apple had infringed 10 patents in technologies like wireless data transfer, a key factor in the success of iPhone. The suit accused Apple of trying to hitch a free ride on Nokia's technology investment.
The patents cover wireless data, speech coding, security and encryption and are infringed by all iPhone models shipped since the iPhone was introduced in 2007, Nokia said.
It's the first card to be played, there's a lot more cards left. How this plays out will largely depend on Apple's response, Merritt told Reuters in an interview, adding the case was likely to continue for a couple of years.
I'd be very surprised if anything gets solved in the short term. It's at least a year before some clarity, he said.
He said if Apple decides to just defend itself, or to countersue, the case would likely last two to three years, but if takes the case to the U.S. International Trade Commission, the decision would come somewhat faster.
InterDigital itself lost a case against Nokia at the ITC earlier this month, and Merritt said the company was likely to appeal the decision.
Apple is likely one of the biggest net payers of royalties in the industry. As a latecomer, Apple has limited intellectual property assets compared with rivals, when all vendors work under cross-licensing agreements.
Most analysts estimate Nokia's demands are in the range of $200 million to $1 billion as it is one of the key patent holders in mobile technologies, alongside Qualcomm (QCOM.O) and Ericsson (ERICb.ST).
Merritt said in addition to a royalty rate, the key issue will be the basis it is counted from, as iPhone's average selling price, $566 in the last quarter, is very high compared with anything else in the industry.
Nokia's average selling price was 62 euros ($92.30) in the same quarter.
Interdigital said it has a licensing deal with Apple, adding it had used the price of a typical feature phone to calculate the rate, not the record-high average selling price.
Ericsson told Reuters it has a licensing deal with Apple, and also Qualcomm said it was getting royalties for all 3G phones sold. Motorola (MOT.N) declined to comment.
Merritt said likely most of the key patent holders have a deal with Apple.
As there are no other legal actions probably the number of unlicensed folks is very small, Merritt said.