Nokia turns to lawsuits for profits

With sales and profits plummeting in the cell phone marketplace, huge industry player Nokia has apparently decided that it is easier to sue its competitors than to actually compete with them.

Since October of this year, Nokia has filed 11 patent infringement lawsuits, including those against Apple, Samsung, and LG. Nokia says that these suits are a “routine” defense of its intellectual property. Since these happened all in a bunch, and since nothing of this sort has been done before, it is a little difficult to see the suits as routine. Lawsuits are often the way these things have been done in the cell phone industry, where patent rights have as often as not been swapped among the larger manufacturers in the industry, given the complex nature of the intellectual property rights in that business.

Some analysts, including Bill Tai, a partner in Charles River Ventures (which has invested about $2 billion in technology start-ups since 1970), believes that the new legal aggressiveness is what he calls “a natural evolution” similar to that which often occurs in the semiconductor and desktop computer businesses during especially difficult or competitive times. Tai said, “As competition has intensified and margins have deteriorated, companies are trying to put up barriers to protect their positions.”

In truth, it would appear that everyone in the cell phone business is suing everyone else in the cell phone business, according to an article in the New York Times. Nokia may just be typical of the breed. Clive Thorne, an intellectual property lawyer at Arnold & Porter in London, says, “Nokia has been very active of late, and in general, there has been an increase in litigation in the industry. There is an attempt to gain technical advantage. Mobile technology is fast-moving. The commercial life of products is limited. There is urgency in ensuring that I.P. rights are protected.”

Experts say that the life cycle of the patents in a tech industry as fast moving as cellular phones is very short, and that companies in the business are trying to leverage their intellectual property rights in whatever way is possible in order to maximize profits from them. Apparently, what they cannot get through the sales of better products, they will seek through the courts. The situation makes a travesty of the term “free enterprise” but that is probably the way the attorneys prefer it.

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