Will RIM Pay Nokia to Avoid BlackBerry Ban?

Published on November 28, 2012
by John Paczkowski

Research In Motion’s contract dispute with Nokia has gone south, and in the worst way possible. A Swedish arbitrator overseeing the pair’s spat over a license for Nokia’s standards-essential patents has ruled that RIM is not entitled to sell devices using the Finnish company’s Wi-Fi technologies until it pays royalties on them.

The dust-up between the two companies involves a 2003 licensing agreement that allowed RIM to use some of Nokia’s standards-essential patents. The BlackBerry maker insists that Nokia’s Wi-Fi patents were included in that deal, reasoning that they should be part of any agreement related to standards-essential patents. But in Nokia’s mind they were not, and the two companies soon began sparring over the issue. Last year, they went into arbitration. And now the tribunal that heard their arguments has determined that Nokia’s Wi-Fi patents were not covered by that 2003 agreement.

This is a huge problem, because RIM is already selling a bunch of hardware that uses them, and has been for years. And now Nokia has filed cases in the U.S., Britain and Canada to enforce the arbitrator’s ruling.

An unfortunate turn of events for RIM, and one that couldn’t come at a worse time. The company is scrambling to launch a new platform and portfolio of handsets that it hopes will help it regain traction in the market it helped pioneer. To have those devices — and its current ones, as well — suddenly pulled from major markets would be a crippling blow.

Which is not to say that RIM is without options here. It could attempt some sort of workaround. It could fight things out in court. Or it could simply roll over and pay the licensing fee Nokia is asking. Of the three, the last seems the most likely option, given the circumstances. As Jefferies analyst Peter Misek told AllThingsD, “We think RIM has to settle, likely a royalty rate of $2 to $5 per handset …”

RIM and Nokia declined comment.

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