Nokia Getting Killed In The Smartphone Market... So Of Course It Sues For Patent Infringement

from the if-you-can't-innovate,-litigate dept

Funny how this works, right? Just a week or so after it's first ever quarterly loss and an admission that it totally screwed up in the smartphone market, Nokia suddenly sues Apple for patent infringement over the iPhone. It looks like the old adage is true again: if you can't innovate, litigate! It's the same story all over again. A company that was a leader in the market but got complacent and lazy, suddenly finds that it lost its lead to a more innovative upstart. Since it's so far behind, even scrambling around doesn't help it to catch up, so it just starts suing over patents.

This story nicely highlights a few other points as well. We keep hearing from patent system supporters how the patent system is necessary because, without it, the market leader would always just immediately copy the upstart and "steal" their idea. Of course, Nokia has had two plus years to "steal" Apple's idea, and where is it in the smartphone market? It's not so easy to just copy someone else's idea -- especially if you're a huge player like Nokia, who will often view the disruptive innovator as not being worthy of paying attention to (which basically was Nokia's reaction to the iPhone).

Separately, remember how confused we were when Steve Jobs proudly hyped up the fact that Apple had over 200 patents on the iPhone concept? We've pointed out that it's hardly done anything to stop lawsuits. Apple has been sued over and over and over and over and over and over again for patent infringement. Welcome to the tragedy of the anti-commons, where it becomes impossible to do pretty much anything innovative without facing massive legal costs. Basically, if you build anything even remotely innovative these days, you're going to get sued for patent infringement, probably multiple times. It's become a massive tax on innovation, rather than a lever for innovation.

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Comes With Music... But No One Cares

from the thank-you-drm dept

Nokia got a lot of attention when it launched its "Comes With Music" concept -- where you buy a phone that comes with "free" all-you-can-eat music downloads for one year. Of course, the music comes wrapped in annoying DRM, though the music will keep playing (thankfully), after the year is up. Still, it seems like people aren't buying for the most part. A recent report shows only 107,000 users worldwide. This must be a blow to the major record labels who always seem to insist that "free music" drives pretty much every other business model. For example, BPI continues to insist that ISPs are basing their own business model on people sharing "free music." And you have record labels who are pissed off because they think that video games Rock Band and Guitar Hero aren't paying enough for all the benefit they get from the music. And, of course, there are all those collection societies claiming that every business that plays any kind of music needs to pay more, because it must be all that music that brings in the business. Well, it looks like Nokia is proving them all wrong. The music, by itself, doesn't seem to attract all that much business at all. Perhaps everyone should be asking for a refund.

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UK Patent Office Approves Software Patent... Rationalizes The Decision

from the and-here-we-go... dept

The UK has held out against the idea of software patents for a while, but with Nokia pushing hard to get a patent on a piece of software related to the Symbian mobile operating system (which, ironically, Nokia has agreed to open source), last year a court ruled that the patent office in the UK had been too quick to dismiss the patent application, and an appeals court agreed. So, it should probably come as no surprise at all that the patent office has now granted the patent in question. What's amusing, though, is how it rationalizes the decision. Rather than just saying "uh, the courts said so," it claims that it allowed the patent because it's "more than just a software program," saying that the invention was a "technical contribution." Apparently, the new rules mean that as long as software makes a "technical contribution" it can be patented. But... uh... what software doesn't make a "technical contribution" of some sort?

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If Criminals Are Smart Enough To Hack Old Nokia's, Can't They Keep A Secret?

from the thankfully-criminals-are-dumb dept

If you have an old Nokia 1100 phone, maybe it's time to dust it off and try selling it in Germany where hackers claim to have figured out a way to use certain Nokia phones to steal authentication codes for bank transactions. There are a few reports that these old phones (if they were made in a very specific factory, not just any old model...) are selling for ridiculous amounts -- ranging from $700 to $30,000 -- presumably because the handsets are so hard to find and are valuable to hackers prone to crime. So far, Nokia says it can't imagine any way for these old phones to be hacked for banking fraud. But not surprisingly, security vendors are quick to point out the plausibility of this type of phone hacking -- since security firms can obviously benefit from unfounded fears that encourage consumers to buy security software regardless of the actual need for it. Is it really that hard to ask a security vendor what the likelihood would be for a criminal to actually succeed in such a scam? Hopefully, the odds of actually stealing any money with these ancient phones are approaching zero -- especially now that the tools to implement the fraud are known and apparently getting quite expensive. Perhaps the real suckers in this story are the gullible hackers who are buying old phones in shady forums for prices that are well more than the phones are worth?

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Finland Agrees To Let Companies Spy On Workers

from the who-needs-trust-when-you-have-technology? dept

Last month, we noted the controversy in Finland, as a new law was up for debate concerning whether or not companies there could spy on employee email. Beyond the general controversy, there were rumors that Nokia, who had been caught breaking the existing law by spying on employee emails before, had supposedly threatened to leave Finland if the law wasn't changed to allow such activities. Nokia has vehemently denied this, but hasn't denied that it supported the law. So... it's probably not a huge surprise that the Finnish Parliament has approved the law.

To be honest, the details of the law aren't that extreme. It doesn't let the company even read the emails -- just record who is emailing whom. For company email, that seems perfectly reasonable. Hell, the day this law passed, RIM admitted not only does it track and record all company email, but it does the same thing for all phone calls as well. Perhaps a more important question is whether or not that's a useful way to spend company resources? The companies obviously talk about the importance of "protecting" their IP, but I once worked for a company that recorded all phone calls as well, and all it really did was make all of the employees angry, disgruntled and less interested in working hard. Having your bosses distrust you can do that...

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Nokia, Qualcomm Move Forward With Non-Patent-Fight-Based Relationship

from the wonders-never-cease dept

Qualcomm and Nokia have been involved in a long-running series of patent disputes over chips in mobile phones. The two companies settled the bulk of their disputes last summer, with Nokia throwing a chunk of change at Qualcomm and the two making nice. This week, the two companies announced they'd work together to put Qualcomm chips in Nokia devices. Nokia, the top global handset vendor, has never used Qualcomm chips, and the work will first be focused on devices for the US market, where Nokia's market share lags far behind its share in the rest of the world. So Qualcomm gets a big new chip customer, Nokia strengthens its offerings for the US markets, and consumers benefit from increased competition. Sounds good all around, and makes you wonder why the companies resisted such an approach in favor of the patent fight for so long.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Is Nokia Demanding The Right To Spy On Its Employees?

from the or-it-will-leave-Finland? dept

There's quite a story making the rounds, suggesting that Nokia is putting significant pressure on the Finnish government, demanding that it pass a law allowing it to spy on its employees, or the company will leave Finland. Nokia is quickly denying the claim, which does seem pretty extreme. However, that doesn't mean that Nokia hasn't put political pressure on the government to pass this law. Apparently, the company has been caught multiple times illegally spying on employees, and has worked hard to get this law passed, which would legalize its actions. Despite legal experts all insisting that the law is unconstitutional, apparently the Finnish Parliament's Constitutional Law Committee has decided to move forward with it anyway -- which is what resulted in the speculation about the threat to leave Finland.

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Whaddaya Know? DRM For Nokia's 'Comes With Music' Is Cracked

from the Just-In-Time-For-Xmas dept

It pretty much goes without saying at this point that any DRM can and will be cracked -- and, of course, once cracked, the content is now freely available pretty much anywhere. It still makes you wonder why anyone bothers. The latest is that Nokia's hyped up "Comes with Music" offering (which has been a commercial disappointment) has had its DRM cracked, and it's unlikely that much can be done to block the DRM cracking system. Once again, you have to ask why Nokia even bothered?

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Nokia Reportedly Looking To Start Its Own MVNO In Japan

from the so-many-people-think-nokia-is-japanese-anyway... dept

A local report says that Nokia is considering setting up an MVNO in Japan, focused on its high-end Vertu line of handsets. Nokia has a small presence in Japan, making it one place -- along with the US -- where its market share lags badly behind its 40 percent or so global share. It would be surprising to see Nokia make a big move into becoming a virtual operator in any market, given that it sells most of its handsets through operators, and wouldn't want to jeopardize those relationships in any way. However, for its Vertu line, it could be a useful model. Vertu devices aren't your typical mobile phone: they cost upwards of several thousand dollars, and often don't include features common on much cheaper devices. They eschew many technical features in favor of expensive build materials and a concierge service for its deep-pocketed customers. Vertu handsets aren't going to be sold by or subsidized by operators, so Nokia could benefit by bundling service with the device as a virtual operator, making the Vertu brand the only one that has any contact with the customer. Given the small number of devices it sells, operators aren't likely to mind too much. But if Nokia made a bigger grab for the mass market, they'd certainly take exception.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Putting iPhone Sales In Perspective

from the it's-good,-but... dept

We didn't have much (well, anything) to say about the recent iPhone launch because it certainly seemed as though the rest of the tech press/blogworld had that one... um... thoroughly covered. However, with the glowing reports earlier this week about how amazing it was that Apple had sold 1 million iPhones over the weekend, Carlo Longino has put that into perspective, noting that it's not quite as impressive as most people seem to think. First, as he notes, since the launch was international (rather than the original iPhones US-only launch), it's no surprise that it would sell many more. But, more importantly, he notes that recent stats on mobile handsets shows that 282 million handsets were sold in the first quarter of this year, and that Nokia alone appears to sell approximately 1.28 million handsets per day. So, yes, selling 1 million handsets over the weekend is a nice round milestone -- and certainly other handset makers are probably jealous of the attention it's getting. But, it's not having a huge impact on the overall handset market just yet.

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Nokia's Open Sourcing Of Symbian Shows How Closed Markets Become Open

from the fear-not dept

Originally I wasn't going to write about Nokia's decision to purchase the rest of Symbian and then open source the code, but a few people have written in to ask about our take, and the more I think about it, the more interesting it becomes. There's certainly been a palpable fear lately among some that things like the locked-down iPhone represent a dangerous "future" to be avoided.

But that doesn't seem to have much historical support. New markets often are driven initially by locked down and proprietary solutions, but openness tends to prevail in the long run. The reason many markets start out with closed and proprietary solutions is that you need a comprehensive enough solution to address the market, and it's often difficult to do that in an ad hoc manner. A proprietary solution gives control to one person or a small group of people who can easily drive the project to where it needs to be to drive adoption. However, in the long run, more open solutions then win out, because competitors realize that the real game is being a platform, which is more important than being the comprehensive supplier. And the way to become a platform is to sign up as many developers as possible, and free them to make your platform much more valuable. That's much easier to do in an open or open source environment.

This is why we're seeing this particular decision to open up Symbian, and also explains Google's open approach with its Android offering. It also explains why Apple's iPhone, which was totally closed at the beginning, has been slowly opening up to try to combat the rise of more open competitors.

Finally, this move by Nokia is a recognition of the economics of infinite goods. Just as IBM helped massively boost its services business by betting big on Linux, Nokia recognizes that freeing up Symbian helps turn it into a services company as well. Freeing up that infinite good (the software) helps generate more demand for the scarce "services" provided by the company. There may be some stumbles along the way, but on the whole this is exactly the type of bet the company needs to be making. And, at the same time, it shows that there's little to fear concerning a future world of "closed" systems a la the iPhone. Every such closed system is merely an opportunity and an invitation for competitors to become more open.

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Nokia Exec To Developers: Embrace DRM & Digital Locks Because I Say So

from the very-convincing dept

In recent years, we've seen the entertainment industry suddenly embrace mobile as a platform, incorrectly believing that its more locked-down nature would mean that it wouldn't face the same "threats" (which they should see as opportunities) of file sharing and open networks and services. However, as is always the way, more open systems are catching on and getting more usage, and more closed systems are having trouble getting traction. Rather than embracing that, however, it appears Nokia is pushing to hold back the tide.

Ben S writes in to highlight a rather unconvincing talk given by a Nokia VP trying to explain to open source developers why they need to embrace DRM, intellectual property, digital locks and subsidies in the mobile world. However, his reasoning basically amounts to "because I say so."

"Why do we need closed vehicles? We do. Some of these things harm the industry but they're here [as things stand]."

In other words, there's no actual reason to use these things, other than that Nokia says you must -- even though it knows such things harm the industry. Way to show leadership in the mobile industry. No wonder it seems like most innovation in the mobile space is coming from folks other than Nokia.

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Columbia Professor Latest To Go On The Patent Offensive

from the very-offensive dept

Over the last year or so, we've seen two disturbing trends in enforcing patents. The first, is seeing patent holders suing a bunch of companies at once rather than just one or two, as used to be standard. They do this because they fear that some type of patent reform is coming, either via Congress or the courts. So they want to get as many patent suits in as quickly as possible. The second trend is that, rather than taking patent infringement cases through the court system (which is bound by the recent precedents set by the Supreme Court that loosen patent rules), they use a loophole: taking patent infringement claims to the US International Trade Commission (ITC). The ITC has the authority, if it believes that infringement occurs, to block the import of infringing goods. The ITC doesn't need to pay attention to what the courts say, and doesn't need to wait for the USPTO to review a patent. It can simply decide infringement occurred and ban the import of the goods. This is, effectively, the equivalent of an injunction against the product (just the sort of thing the Supreme Court said should be used more cautiously).

A Columbia professor has now picked up on both of these trends, getting the ITC to investigate 30 companies for violating her patents on LED and laser technologies. Among the companies investigated: Sony, LG Electronics, Hitachi, Toshiba, Panasonic, Motorola, Nokia, Pioneer, and Samsung. Whether or not these patents turn out to be valid, it's a cheap tactic to use the ITC rather than going to the courts to fight this battle.

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Patent Holding Company Sues Nokia For $18 Billion

from the aim-high dept

And you thought NTP getting RIM to shell out $612.5 million was excessive? It seems that other patent holding companies are shooting much higher. About a year ago, we noted that some private equity firms were so thrilled with the outcome of various patent hoarding lawsuits that they were raising funds solely to buy up patents, stick them in shell companies, and sue businesses that actually made products. We're seeing more and more of those types of lawsuits, with the latest one being pretty impressive. Private equity firm Fortress Investment Group has backed a patent holding firm IP-Com, who is now suing Nokia for patent infringement to the tune of $17.77 billion (yes, billion with a b). At that rate, a mere $600 million seems like pocket change. Expect to see a few more of these types of lawsuits, as well. With so much money going into these patent hoarding firms, combined with fears that we may finally seem some legitimate patent reform (either via Congress or the Supreme Court), many patent holders may be scrambling to squeeze whatever they can as fast as they can -- and starting off with ridiculous numbers is one way to push for a faster settlement.

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Smartphones Patented... Just About Everyone Sued 1 Minute After Patent Issued

from the wasting-no-time dept

This past Tuesday, the US Patent and Trademark Office issued a patent on "a mobile entertainment and communication device." Reading the patent, you realize it describes the quite common smartphone. It's a patent for a mobile phone with removable storage, an internet connection, a camera and the ability to download audio or video files. The patent holding firm who has the rights to this patent wasted no time at all. At 12:01am Tuesday morning, it filed three separate lawsuits against just about everyone you can think of, including Apple, Nokia, RIM, Sprint, AT&T, HP, Motorola, Helio, HTC, Sony Ericsson, UTStarcomm, Samsung and a bunch of others. Amusingly, the company actually first filed the lawsuits on Monday, but realized it was jumping the gun and pulled them, only to refile just past the stroke of midnight.

As the link above explains, the patent itself is based on a bunch of continuation filings, which are commonly used by patent holders who want broad patents to cover the latest technologies well after they've already come about in the market. It would seem like the concept itself, merely combining a bunch of things that people were already talking about, should never have been granted based on the Supreme Court's recent KSR ruling that merely combining existing concepts doesn't deserve a patent. Also, as noted in the comments to the link above, it would appear that there's a fair amount of prior art. In fact, Apple even sent over some prior art concerning the patent just before it was originally supposed to be issued last summer -- but somehow patent holder's lawyers talked their way around it. In the meantime, it looks like we've got yet another case of an overly broad and obvious patent being used against a huge number of firms. I'm sure that's exactly what Thomas Jefferson expected when he created our patent system.

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Why Would Any Company Trust Microsoft Over DRM Ever Again?

from the fool-me-once dept

It really was just last week, right, that Microsoft was last seen totally screwing over all those partners who had signed up to use its misnamed "PlaysForSure" DRM? Apparently, bygones are bygones and other companies have no problem stepping right up into Microsoft's embrace on a new DRM solution -- this time in the mobile space. Nokia is apparently agreeing to use Microsoft's mobile DRM offering dubbed "PlayReady" on a variety of Nokia devices. You would have thought that after the PlaysForSure debacle, Microsoft would avoid dubbing its DRM anything similar. Give it a few years and perhaps Microsoft will support some totally different DRM on its own phones (like it did with the Zune) and then we can ask again what Nokia was thinking.

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Qualcomm's Small Patent Victories

from the it's-something dept

Qualcomm has always been a strong supporter of the patent system, as it was the basis for much of its revenue over the past decade. However, lately, the company has been getting hit left and right by patent lawsuits against it. Last week, though, the company ended up with a few minor (and perhaps temporary) victories against opponents. First, the International Trade Commission tossed out a complaint from Nokia asking the ITC to ban the import of Qualcomm chips. Nokia had simply taken a page from Broadcom, who had successfully used the ITC loophole to get a second shot at Qualcomm over its patents. Given how often companies have been starting to use this loophole, it's nice to see that the ITC doesn't always rollover for patent holders.

In the meantime, speaking of Broadcom, we had noted last month that thanks to a Supreme Court ruling that raised the bar for declaring "willful" infringement of a patent, the judge in the Qualcomm-Broadcom suit had given Broadcom a choice. Either retry the case under the new rules, or drop the "willful" part and get less money from Qualcomm. Broadcom has now chosen the latter option, and will accept a smaller payout from Qualcomm for infringement. Of course, it's not all good news for Qualcomm. Nokia still has lawsuits going against Qualcomm, with one getting underway in the UK this week. Broadcom is still seeking the courts to rule for an injunction blocking the import of certain Qualcomm chips as well (even as the ITC is already helping out on that front). Once again, no one seems willing to explain why Broadcom gets to take two whacks at Qualcomm over the same exact issue. In the meantime, while it would be nice to think that these recent messy lawsuits would give Qualcomm a chance to rethink some of its beliefs about the patent system, somehow that seems unlikely to happen any time soon.

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Well Played Garmin. Well Played.

from the check-and-mate dept

Sometimes you just need to stand back and applaud a strategy that works so well. Many people thought that navigation device provider Garmin would be in trouble earlier this year after its main rival TomTom agreed to buy mapping service Tele Atlas and Nokia agreed to buy TeleAtlas' only real rival Navteq. Potentially, that could have left Garmin without a mapping partner, though it seem difficult to believe that Nokia would cut off Garmin. However, Garmin tried to outbid TomTom for Tele Atlas while also buying up 5% of Tele Atlas' shares on the open market, leading TomTom to significantly increase its own bid, from the original $2.5 billion offer all the way up to $4.2 billion. People were waiting to see if Garmin would go even higher, but instead, it pulled a nice switcheroo. First, it worked out a settlement with TomTom on various patent lawsuits the two were fighting, and then went in for the kill. Garmin signed a long term deal with Navteq, guaranteeing access to its maps for the next 10 years (6 years, with a 4 year option afterwards) and then dropping its bid for Tele Atlas. In other words, Garmin doesn't have to worry about being shut out from mapping services for 10 years (at which point other options may be available), it doesn't have to pay $3.3 billion to buy Tele Atlas, it forced its main competitor TomTom to spend $1.7 billion more than it wanted to. And, oh yeah, it'll make back a bunch of money when TomTom takes over Tele Atlas, because that 5% stake that Garmin had acquired will get sold at a nice premium in the acquisition. Well played, Garmin. Well played, indeed.

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Garmin Doesn't Want To Be Left Without Maps... Bids On Tele Atlas

from the musical-mapping-chairs dept

Over the summer, navigation device maker TomTom announced plans to buy Tele Atlas, one of the two leading providers of mapping data. Earlier this month, Nokia announced plans to buy Navteq, the other major provider. That resulted in immediate speculation about how Garmin (TomTom's main competitor) would respond. Apparently, the answer is with lots and lots of money. Garmin has now put in an unsolicited bid of $3.3 billion for Tele Atlas, hoping to outbid its rival by 15%. So, at this point, a game of musical chairs begins, with Nokia, Garmin and TomTom fighting it out over the two mapping data providers. Since both TomTom and Garmin seem to feel that they need to have Tele Atlas, don't be surprised to see the price keep going up.

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Nokia Finds The Shortest Route To Navigation Info: Buys Navteq For $8 Billion

from the turn-right-$8-billion-ahead dept

Nokia made a bit of a splash this morning by announcing plans to buy digital mapping/navigation firm Navteq for $8.1 billion. Navteq is definitely the leading player in the space, followed by TeleAtlas -- and the two companies basically dominate the market. Earlier this year, you may recall, navigation device maker TomTom announced plans to buy TeleAtlas, though that deal is not yet completed.

Many people are speculating on what this could mean for Garmin, TomTom's main rival in the navigation device space. Garmin uses Navteq for its maps, but it seems hard to believe that Nokia would simply cut off Garmin. That would take a huge chunk of revenue out of the deal, making it a lot less worthwhile. What's much more interesting is how this shows the strength of Nokia's commitment to really leveraging mobile devices for location-based services and navigation information. People have talked about such things for years, and Nokia's purchase certainly suggests that they're about to make a big push into moving navigation info and location-based services out of a separate device and into mobile phones.

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