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Nokia Gives Qualcomm a $20M Olive Branch

UPDATED: Finnish handset maker Nokia  sent Qualcomm  a $20 million payment today, but all it got for its trouble was another complaint.

The company said the check represents what it thinks it owes for using Qualcomm's intellectual property in wideband CDMA (WCDMA) handsets for the second quarter of 2007.

The two companies are embroiled in several lawsuits and protracted negotiations over extending or renewing an agreement on cross-licensing fees. The agreement is due to expire on April 9.

Nokia may have intended the gesture as a peace offering, but Qualcomm saw it as another affront. Qualcomm chided the handset maker for setting an arbitrary amount and announced that it has filed an arbitration demand with the American Arbitration Association (AAA).

In its filing, Qualcomm is asking the AAA to force Nokia to continue paying the same licensing fees as it has been up until April 9, as well as to prohibit Nokia from using any Qualcomm technology at all if Nokia sues Qualcomm after April 9.

"Nokia has no more right to unilaterally set a price than the average consumer has a right to walk into a store, take a product off the shelf, and walk out with it after leaving only a fraction of the established price on the counter. Leaving some money on the counter does not make the act any less unlawful," the company said in a statement.

Qualcomm has a portfolio of patents in second-generation wireless telephony, including CDMA  for which it receives licensing royalties. Nokia also owns patents in wireless telecom, but those concern so-called 3G handsets using GPRS  and EDGE  technology that facilitate data transmission and other advanced services.

Nokia spokesman Bill Plummer said the $20 million represents a good-faith effort on the part of Nokia to settle their disagreements. "We recognize that it's not unusual for parties to engage in protracted negotiations, even in some cases past the expiration date," he told internetnews.com.

According to Plummer, Qualcomm has pledged to license its CDMA technology on fair, non-discriminatory and reasonable terms. Given that the two companies have thus far been unable to come to an agreement on what those terms would constitute, Nokia has taken it upon itself to estimate what it thinks it owes Qualcomm for the use of CDMA IP in 3G handsets also using GSM, EDGE and GPRS IP for the next three months.

"Our assessment of the royalties due Qualcomm for our incorporation of their minority CDMA property is represented by that $20 million payment," said Plummer.

"We're helping them live up to their commitment to negotiate under terms that are fair, reasonable and non-discriminatory."

The issue being negotiated has to do with how much Qualcomm is owed for its IP in next-generation cell phones. Nokia contends that it should owe Qualcomm less than in the past because cell phone technology has evolved to the point where new IP developed by Nokia plays a larger role in 3G handsets than does the IP owned by Qualcomm.

Plummer also noted that Qualcomm will owe Nokia for technology they sell that relies to any extent on Nokia IP.

Qualcomm disputed this version of events and said its licensing program for products using the new IP "is well established and confirms that Qualcomm's licensing terms and conditions, including royalty rates, are fair and reasonable."