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Friday, November 06, 2009, 06:05 am PT (09:05 am ET)

Apple predicted to countersue in legal battle with Nokia

Following Nokia's lawsuit against Apple for alleged patent infringements in the iPhone, experts have said it would be standard practice for Apple to countersue in the case, which is predicted to last 2 to 3 years.

A new report from Reuters said that the most likely scenario for both companies to not be engaged in a lengthy suit is if they can reach a licensing deal outside of the courts. But analysts believe it is likely that Apple will countersue Nokia for its own patents and allege separate infringement.

"This type of tit-for-tat approach has occurred in previous patent battles as each player tries to improve its negotiating position," said Ben Wood, research director at CCS Insight.

In addition, the report said that the fight between the two massive companies could become even more complex, spilling over to Europe like the Nokia-Qualcomm battle, and possibly ending up in the hands of the U.S. International Trade Commission. The original complaint was filed in October in a U.S. District Court in Delaware. That case, experts said, could be stayed until an ITC decision.

Nokia has alleged that Apple violated ten patents it owns. Nokia claims ownership of technology related to Global System for Mobile communications (GSM); wireless local area network (WLAN); and Universal Mobile Telecommunications System (UTMS). The Finnish company has argued that it has invested more than 40 billion Euros into research and development in the last two decades, giving it a broad portfolio of patents. The company has entered into license agreements with about 40 companies for these patents.

Nokia's suit specifically cites 10 patents that cover wireless data, speech coding, security and encryption. It has alleged that all iPhone models released since 2007 infringe on these patents.

Analyst Gene Munster with Piper Jaffray has predicted that Nokia is looking to obtain a patent royalty of 1 percent to 2 percent, or $6 to $12, on every iPhone sold. Other estimates cited by Reuters suggest Nokia seeks compensation in the range of $200 million to $1 billion.

Though Apple's formal response, and potential countersuit, is expected soon, the company has not yet made any moves. Apple did, in its annual Form 10-K filing with the U.S. Securities and Exchange Commission, note that it will "vigorously" defend itself against Nokia's complaint.

Analysts who spoke with Reuters said a settlement might be the best option for both companies. The situation is particularly difficult because it is said to be "unlikely" a company could create a mobile phone without using Nokia-patented technology. And Nokia doesn't want to "kill the goose with the golden egg" either, said Steven Nathasingh, managing director of U.S. research firm Vaxa Inc.

"They both have something to gain if they can put their heads together for a win-win," he said.