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Another blow for HTC: Company must change chip design after losing patent fight with Nokia

Published Oct 2nd, 2013 3:50PM EDT
HTC Nokia Patent Ruling

HTC is working with Qualcomm to alter a chip design that has been judged to infringe on Nokia’s radio patents, The Wall Street Journal reports. The original ITC ruling on the matter involved only older handsets, but the dispute could engulf the new HTC One flagship model by January. Nokia has a wide and deep portfolio of patents spanning several key areas, including antenna design, power consumption reduction techniques, email transmission, messaging functionality and menu systems. The company has widely been regarded as not pursuing its patent cases against Asian vendors aggressively, while it has focused on it skirmishes with Apple.

But now that Nokia is selling its handset unit to Microsoft, it is retaining the patent portfolio and creating a dedicated unit specializing in IP licensing. This could mean that Nokia is going to start to go after Asia’s rapidly growing smartphone vendors with increased aggression. From Micromax to Karbonn, there are plenty of Indian and Chinese vendors that are now starting to expand their export drive to Europe, Africa and Americas. As these companies begin to focus more on export markets, they become more vulnerable to patent cases brought against them in countries where they don’t enjoy home market advantage in courts.

For HTC, the Nokia case is turning into a potentially expensive headache just as the company’s operating margins are slipping into the red. Nokia is now getting radio design litigation victories that demonstrate Qualcomm’s components must be redesigned to conform to ITC rulings. This could be a valuable advantage as Nokia starts gunning for chip companies used by Asian low-cost smartphone vendors.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.