Nokia and Apple are squaring up for a bruising legal battle after the Finnish mobile phone maker filed a legal complaint against its Californian rival that could culminate in Nokia taking a cut on every iPhone sold by Apple.

Nokia has filed a claim in the Federal District Court in Delaware alleging that Apple has infringed ten of its patents related to the GSM, UMTS — or 3G — and wireless local area network standards used in Europe. It has accused Apple of getting a “free ride” on the back of its technology, which 40 other mobile phone manufacturers already pay to use.

The Finnish group said that all iPhone models sold since the device’s launch in 2007 had infringed its intellectual property rights. It said that the ten patents related to technologies “fundamental” to making devices that were compatible with the European standards. The patents relate to wireless data applications, speech coding, security and encryption — all crucial processes in running a smartphone.

If Nokia wins its case, which is unlikely to reach court for about two years, it will benefit every time an iPhone is sold. That would dispel notions that the mobile phone giant is trying to exclude its smaller, but highly successful, competitor from the market. It is likely that complaints will be filed around the world, lawyers said.

A Nokia spokesman said that the litigation was the “last resort”, suggesting that the issue has been in dispute since the iPhone went on sale two years ago. Any settlement or award would be backdated to the iPhone’s launch, and so could be worth hundreds of millions of dollars, according to lawyers.

Ilkka Rahnasto, vice-president for intellectual property in Nokia, said: “The basic principle in the mobile industry is that those companies that contribute in technology development to establish standards create intellectual property, which others then need to compensate for. Apple is also expected to follow this principle. By refusing to agree appropriate terms for Nokia’s intellectual property, Apple is attempting to get a free ride on the back of Nokia’s innovation.”

Nokia fought a fierce battle with Qualcomm, the US mobile phone technology developer, over patent infringement. The two traded legal blows over a three-year period before agreeing to license each other’s technology.

Lawyers believe that Nokia is playing a dangerous game. Robin Fry, a partner in Beachcroft, said: “This is a poker game in which there is a risk that Nokia’s patents could be ruled invalid. It’s a high-risk strategy for them.”

He said that the dispute was a result of Apple’s determination to pursue its own path rather than collaborate on technology standards. It does not take part in cross-licensing deals, and so is vulnerable to being charged a higher rate than other phone developers.

Mr Fry said that it was as yet unclear what cards were held by Apple, which has declined to comment on the litigation. “It’s a big bat that Nokia is swinging, but it may be that Apple has some pretty effective armoury at its disposal,” Mr Fry said.

Nokia holds 10,000 patents related to European and global mobile phone technologies and has invested about £36 billion in research and development over the past two decades.

Ilya Kazi, of Mathys & Squire, a law firm, said that the case would probably be settled before any potential injunction against iPhone sales was enforced. He said that the timing of the lawsuit was intriguing, given that the iPhone is set to go mainstream in the UK, with Orange and Vodafone to begin selling it over coming months.

3 UK set to sell device

Kevin Russell, chief executive, of 3 UK, expects to be selling Apple’s iPhone on his network by mid-2010, but said the handset will not be at the centre of 3’s strategy. He said: “I would like to see the iPhone on our network, but I wouldn’t want to be reliant.” If 3 UK agrees a deal with Apple, it would follow O2, Vodafone and Orange in selling the iPhone in Britain. Over the past two years, the UK’s smallest network operator has not joined the rush to source flashy, expensive handsets to raise market share. Yet even without the iPhone, often credited with boosting usage of mobiles to access the internet, 3 UK has lifted its mobile data traffic by offering online services that utilise its network.

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