The Biggest IP Battle On Earth Reaches A Truce (QCOM)(NOK)

Wall St. cannot underestimate the extent to which the intellectual property battle between Nokia (NOK) and Qualcomm (QCOM) has created a log-jam that has held back advances in the world of the wireless internet.

Now, that has changed and the industry has a great weight lifted from its ability to creat a much larger global business which can now actually compete with the PC-based internet.

Not more than a year ago, the FTC blocked Qualcomm (QCOM) customers from bringing cell phones into the US because they contained new chips and software that several companies including Nokia (NOK) and Broadcom (BRCM) said violated their patents.

At the same time Qualcomm was pushing the point that its intellectual property was being used in most Nokia phones and that it was due a large toll for each unit sold. The size of those fees opened the door for the world’s largest handset company to challenge Qualcomm’s assertion in court. Even a modest victory on the royalty issue would have saved Nokia hundreds of millions of dollars a year.

Yesterday, Nokia and Qualcomm settled what was probably the most important technology IP dispute of the last 25 years. According to The Wall Street Journal, "This is a landmark deal," said Timothy Luke, an analyst at Lehman Brothers. "This removes a ton of uncertainty from the industry."

The news is critical to the entire industry because it covers both technology for existing wireless networks and future networks which will use WiMax and another long-term solutions to increasing speeds over cellular systems.

If the legal battle had continued for several more years, it could have slowed the deployment of WiMax and other solutions which will bring 4G, extremely fast broadband, to the airwaves. These new products perform so well that cellular companies could begin to take customers from the landline broadband systems currently controlled by cable and telecommunications companies. In the US alone, there are 50 million consumer up for grabs.

The IP dust up was also preventing the sale of some of the most advanced handsets, another route for the industry to take to reach customers who want wireless computing. The legal channels to these products are now open.

Qualcomm and Nokia may have been hurting themselves by their attempt to grab land in the wireless future, but they were also holding back almost every other company in the industry by robbing them of access to advancements which they needed to move to the next and perhaps most promising stage of their businesses

Wireless can now compete with land based internet and that will cause a level of competition for the broadband customer beyond most consumer’s imaginations.

Douglas A. McIntyre