It's much bigger than Nokia and Apple

It's much bigger than Nokia and Apple

How much will Apple end up paying if it is successfully sued by Nokia for alleged patent infringements? Well, in a research note Bloomberg obtained from Piper Jaffray & Co's Gene Munster, Nokia in the "extreme scenario" could get $12 for every iPhone that Apple sells.

Nokia has asked for royalties going back to the launch of the iPhone two years ago. Apple has sold 33.7 million units. That would mean a payment to Nokia of more than $404 million.

A lot of money, but a drop in the ocean for Apple, which made a net income of $1.67 billion in the fourth quarter. Net income is the money a company shares among its shareholder after taking out all expenses, like tax, salaries and more. And Apple has about $34 billion in cash.

Nokia's attempts to sue Apple raises some interesting questions. Nokia says its spent $60 billion developing the technology that make mobile phones work.

Ilkka Rahnasto, vice-president for intellectual property at Nokia, argues:

“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.”

So Apple could use the technology like many of its rivals do, if it pays for the privilege. We have yet to hear Apple's side of the story.
 
Move a step on from here to the drug industry. The giants of the industry - Glaxo SmithKline, Pfizer, AstraZeneca to mention a few - spend billions of dollars on research and development every year. But their blockbuster drugs have a limited patent life before the generic drug makers step in and produce and sell them a lot cheaper. A typical patent can last up to 20 years, but the clock starts ticking as soon as trials begin on a drug, so it could be considerably less.
 
Many would argue generic manufacturers enable developing nations the opportunity to acquire cheaper drugs. That may be the case. But some drugs are not available to people in industrialised nations.
 
Britain's National Institute for Health Clinical Excellence (NICE) blocked the use of Glaxo's breast cancer drug Tyverb. It's the job of NICE to decide whether it is cost effective to use some new and rather expensive drugs. A call I wouldn't like to make, Glaxo says some 2,000 women would be denied use.
 
Brazil and India are considering making a formal complaint against the European Union over the seizure of generic drugs by Dutch customs. The blood pressure drug was on route to Brazil from India.
 
Developing nations say that the EU, having given concessions to produce generic drugs, was trying to claw back any gains they made. The EU argues it has the right to make checks to protect its ciztizens and those in poor nations from fakes drugs.
 
The drug industry is not alone in fighting its corner in the intellectual property arena. The music, software and film industry would like to stop illegal downloading. And the news industry, led by Rupert Murdoch, would like you to pay for their services. The battle lines are drawn. And in the end it could be the courts who decide what you pay.
 
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