ITC Judge Says Nokia Doesn’t Infringe Qualcomm Patents

In June 2006, Qualcomm filed an ITC complaint asking the commission to bar imports of Nokia GSM/GPRS/EDGE handsets into the U.S. Qualcomm alleged that the phones infringed six CDMA patents it called “essential” to the GSM standard. Before a hearing set for September 2007, Qualcomm removed three patents from the complaint. Late Wednesday, Administrative Law Judge Paul Luckern said two of the remaining patents didn’t apply and the third was invalid.

“This decision confirms [Nokia’s] belief that Qualcomm does not have relevant GSM patents,” said Rick Simonson, chief financial officer. “This is another failed attempt by Qualcomm to mislead both Nokia and the telecommunications industry.” Qualcomm tried to use the ITC as “a forum to dismiss and bypass its binding commitments and obligations made within the standards-setting process regarding declared ‘essential’ patents,” he said. “For the continued proper functioning of the standardization process, all parties need to adhere to the rules of the standard-setting bodies.”

The decision goes to the full commission, which has 30 days to review it, Vander Schaaf said. The judge must still set a remedy, and the commission will have more time to review that, he said. A Nokia spokeswoman was unsure when the remedy recommendation would come, but Vander Schaff said it’s usually within a few days of the initial determination. The commission will make the final ruling April 25.

The preliminary decision probably signals that Nokia will win, since the ITC usually adopts the administrative law judge’s opinion, Stifel Nicolaus analyst Rebecca Arbogast said. But Vander Schaaf said the ITC has no problem rejecting its judges’ determinations. Unlike the U.S. appeals system, the commission doesn’t have to defer to a lower judge’s opinion, he said. The commission leaves IDs alone about 75 to 80 percent of the time, he said, but it sometimes “tweaks on the edges,” for example, to remove a patent from the ruling. He estimated that happens “about 50 percent of the time.”

The commission is more likely to change the judge’s remedy determination, a separate decision that should be forthcoming, Vander Schaaf said. “Commissioners really consider the remedy issue to be their own,” he said. In the Broadcom-Qualcomm case during the summer, the ITC accepted the initial determination but changed the remedy, he said.

If the ITC adopts the initial, the decision will be more a “missed opportunity” than a defeat for Qualcomm, Arbogast said. A ruling in Nokia’s favor doesn’t directly hurt Qualcomm business, but does curtail Qualcomm’s effort to stop Nokia from making “big gains” in the U.S. GSM market. No matter what the ITC decides, carriers won’t be significantly affected, she said. If Qualcomm pulls out a victory, an ITC ban against Nokia wouldn’t have nearly the effect on carriers as last summer’s ITC limited exclusion order blocking import of Qualcomm chips infringing Broadcom patents, she said.

“The action does not address Nokia’s WCDMA or ‘3G’ products and the ID therefore has no bearing on such products,” Qualcomm said. Nokia’s 3G handsets have no relevance to the case, but Qualcomm may be “leaving room” to file a new complaint charging them, Arbogast said. If the ITC adopts the initial determination and Qualcomm has “grounds,” there’s nothing to preclude the chip maker from going in that direction, she said.

The ITC ruling won’t affect other Qualcomm-Nokia fights in the U.S., Arbogast said. ITC decisions “stand on their own” and “don’t bind” U.S. courts, she said.

The determination wasn’t Qualcomm’s only bad news this week. Tuesday, a San Diego U.S. District Court judge ordered Qualcomm to pay Broadcom $9.26 million in legal costs and interest. The order followed the court’s August finding that Qualcomm engaged in litigation misconduct when its lawyers failed to disclose thousands of documents related to patents that Qualcomm said Broadcom violated (CD Aug 8 p6).