Nokia Sues HTC, RIM, Viewsonic Over Patent Dispute: Is Patent Litigation More Important Than Innovation?

Nokia
Nokia corporate image. Reuters

Nokia
Nokia is suing HTC, Research In Motion and Viewsonic over a patent dispute. The pending litigation is just another defensive business tactic taken by a consumer electronics giants in order to XXXXXXX. (Photo: REUTERS)

Following several hiccups during the release of the Lumia 900, Nokia corrected its problems with its latest mobile device, wooed smartphone critics and continued to aim itself toward reclaiming the throne as the world's largest seller of mobile devices.

The next step in recovery?

Suing some of its biggest competitors.

Nokia is filing patent suits against HTC, Research in Motion and Viewsonic in the U.S. and Germany over technology used in mobile devices from each of the companies. In total, 45 different patents are in suit in one or more of the actions.

Nokia claims that proprietary technology is being used by each of the companies to enable hardware capabilities such as dual function antennas, power management and multimode radios, as well as to enhance software features including application stores, multitasking, navigation, conversational message display, dynamic menus, data encryption and retrieval of email attachments on a mobile device.

Louise Pentland, the legal officer at Nokia, added to the written statement concerning the pending litigation, saying, Many of these inventions are fundamental to Nokia products.

The company appears to be especially weary after losing its reigning title as the world's largest mobile phone seller. Nokia had been the world's largest seller of mobile phones for 14 years before losing its position to Samsung.

The most recent IDC report about the top five worldwide smartphone vendors shows that Nokia has fallen to third place in the first quarter of 2012. Samsung currently has 29.1 percent market share, Apple has 24.2 percent of market share and Nokia has just 8.2 percent market share.

Tough Times? Sue Your competitor

Nokia's tactic of suing its biggest competitors while in a time of financial trouble shares strong parallels with Yahoo's recent effort to sue Facebook, though it should be noted that Nokia has targeted several companies in its pending legal action. Both companies are in the same ballpark of market valuation. Yahoo currently has a market cap of $19.03 billion and Nokia has a market cap of $13.59 billion.

Patent litigation has been especially high in among American technology companies such as Apple, Microsoft and Motorola as markets in the mobile arena continue to converge. These large companies, especially the older ones with thousands of patents, have clung on to their intellectual property as a safety net while stock prices have fallen.

As Silicon Valley giants battled in court systems around the world, Nokia managed to refrain from taking legal action against its competitors until most recently. Many of the existing lawsuits between major technology companies are occuring between Apple Inc and Android distributors such as Samsung, Google and Motorola.

Yahoo -- similar to Nokia -- has seen its stock price stagnate in recent years as younger rival companies such as Facebook and Google thrived. One of the biggest differences between Yahoo and Nokia is that there have been far fewer changes in leadership at Nokia than there has been at Yahoo. There's also a big difference in the number of patents each company owns.

Nokia says that it owns about 10,000 patent families according to a TechCrunch report. That number gives Nokia a huge advantage as it enters a series of legal attacks. As has been proven with companies such as Kodak, patents can provide a financial cushion aleviate the pressure felt by free-falling stock prices.

By comparison, Yahoo owns more than 3,300 patents and Facebook owns 160 patents according to a Reuters report. Apple Insider recently reported that Kodak's digital-imaging patents could be worth more than five times the company's market cap. The number of patent families that Kodak owns was not disclosed.

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