Apple has filed a massive lawsuit against patent trolls, Acacia Research Corp. and Conversant Intellectual Property Management, accusing them of colluding with Nokia Corp. "to extract and extort exorbitant revenues" from Apple and other cellphone makers. According to the Cupertino, California-based tech giant’s complaint, which was filed on Tuesday in the U.S. District Court for the Northern District of California, the defendants failed to meet their obligation to license patents that have been incorporated into cellphones in accordance with fair and reasonable terms.
Acacia is a publicly traded patent licensing firm based in Newport Beach, California. One of its subsidiaries sued Apple for patent infringement and was awarded $22 million by a Texas jury in September. Similarly, Conversant, which claims to own thousands of patents, announced last week that a Silicon Valley jury had awarded one of its units a $7.3 million settlement in an infringement case against Apple involving two smartphone patents.
Nokia, once the world's dominant cellphone maker, missed out on the transition to smartphones triggered by Apple's introduction of the iPhone in 2007. The Finnish company sold its handset business to Microsoft Corp two years ago, leaving it with its telecom network equipment business and a bulging portfolio of mobile equipment patents. But this year, Microsoft sold its Nokia-feature phone business to a new company called HMD Global.
The lawsuit marks the first large scale attempt by a cellphone maker to use a private antitrust claims to counterattack the patent trolls that are bombarding them with lawsuits. For the uninitiated, a patent troll (or "non-practicing entity" as the white house has coined it) is an entity that buys up ambiguous, vague or broad patents (typically patents that are not otherwise being used) and then tries to make money off of them by threatening to sue (i.e. demanding a license fee from) anyone who could arguably be said to be using them without permission ("infringing them"). A ruling on the suit could also add some much-need court guidance on the extent to which buyers must abide by fair licensing agreements when they acquire a patent.
On Wednesday, Nokia responded by filing a number of lawsuits of its own – three in Germany and the other in the U.S. (in the U.S. District Court for the Eastern District of Texas). In its suits, Nokia alleges that Apple violated 32 technology patents, including those for displays, user interfaces, software, antennas, chipsets and video coding.
"Since agreeing a license covering some patents from the Nokia Technologies portfolio in 2011, Apple has declined subsequent offers made by Nokia to license other of its patented inventions which are used by many of Apple's products," Nokia said in a statement.
"We've always been willing to pay a fair price to secure the rights of patents covering technology in our products," said Apple spokesman Josh Rosenstock. "Unfortunately, Nokia has refused to license their patents on a fair basis and is now using the tactics of a patent troll to attempt to extort money from Apple by applying a royalty rate to Apple's own inventions they had nothing to do with."
The legal actions by Nokia and Apple appear to mark a revival of the "smartphone patent wars" that began five years ago, when Apple filed a series of patent infringement cases against Samsung Electronics around the world, with wins and losses on both sides.