Nokia Threatens to Halt BlackBerry Sales with Patent Lawsuit

Nokia has set its crosshairs on Research In Motion in an unexpected but potentially devastating legal assault.

The finnish mobile giant is suing the Canadian BlackBerry maker over patents, a move that could halt sales of BlackBerrys at an incredibly crucial time. Nokia says RIM is in breach of a patent licensing agreement that began in 2003, which means it is “not entitled to manufacture or sell WLAN products without first agreeing royalties with Nokia.”

Unlike the Samsung and Apple wars, where both companies are performing excellently in the smartphone space, Nokia and RIM are each enduring tremendous struggles. However, Nokia appears to have the upper hand—the company has more than 30,000 patents, many of which are commonplace in today’s mobile products. That’s unfortunate for RIM, who quite literally cannot afford to lose this battle, especially if the sales halt ends up including forthcoming BB10 devices.

“The arbitrator’s ruling is a blow to RIM at an inopportune time given the fact the BlackBerry 10 launch is right around the corner,”  Kevin Restivo, a mobile device analyst at global research firm IDC, told The Globe and Mail.

However, Kevin says RIM still has options, though coughing up royalties may be the best one: “RIM could, for example, try to develop some sort of workaround to avoid the need for a deal with Nokia which theoretically gets it out of the company’s cross hairs… This option isn’t likely given the complexity and time taken to develop wireless technology communication patents and equipment. It’s far more efficient to pay the patent holder.”

The Globe points out that RIM has “mishandled some pretty major legal cases” in the past.

In the past, RIM has mishandled some pretty major legal cases. In 2006, it had to pay $612-million (U.S.) to NTP Inc. after battling patent infringement allegations in court. It also announced that it’s BlackBerry 10 operating system would be called BBX before it was revealed that another company already had the rights to that name. But RIM, a much smaller company by market capitalization and employee count than many of its global peers, has been trying to boost its patent portfolio: It was part of a coalition of companies, which included Apple, that bought a batch of patents from Nortel Networks.

National Bank Financial analyst Kris Thompson pegs the value of the licensing agreement at up to $350 million, or about 6% of RIM’s current market cap.

Photo: Reuters