Patent Dispute Costs Nokia $253M

You win some, you lose some.

Finnish cell phone giant Nokia agreed to pay U.S.-based InterDigital Commmunications $253 million to quash a long-running patent dispute over 2G handsets.

In exchange for Nokia’s payment and agreement to end appeals before U.S. and UK courts of a 2005 ruling, InterDigital will grant Nokia a paid-up license for 2G TDMA equipment and infrastructure.

InterDigital, which specializes in making wireless modems, will not enforce its three UK patents and will allow Nokia to continue to make and sell unlicensed 3G terminal units.

While the pact absolves Nokia of patent infringement liability through April 26, future licensing by Nokia of InterDigital 3G technology is in doubt.

A 1999 license agreement set to expire at the end of April will not be renewed. As a result, Nokia’s sale of 3G products after the 26th will be unlicensed, according to the Prussia, Pa.-based InterDigital.

Canceling the 2G license with Nokia gives the companies “a clean slate from which to work and resolve 3G issues,” said InterDigital CEO William Merritt.

“We remain hopeful that we can reach an amicable resolution on this issue on terms acceptable to both parties,” Merritt said.

InterDigital spokesperson Jack Indekeu said licensing talks could last up to a year, after which “other legal remedies kick in.”

The suit was caused by the impact to Nokia of InterDigital’s licenses with Ericsson and Sony-Ericsson.

“This case demonstrates that legal disputes are sometimes necessary in order to lower unrealistic demands,” said Ilkka Rahnasto, Nokia’s Vice President of Intellectual Property Rights.

In other news in the murky world of wireless licensing, Qualcomm, a partner and competitor of Nokia, said that it may not be able to renew its wireless CDMA PACT with Nokia by the time the current one expires in April 2007.