Immersion ( IMMR) shares are jumping as word leaks out about Nokia's ( NOK) plans to use the company's vibration technology in a new touchscreen phone.

Nokia, which licensed Immersion's VibeTonz technology in 2007, is expected to use the systems on up to three different thin touchscreen phones expected to be available as early as this fall, according to people familiar with the plan.

The San Jose tech shop develops so-called haptic feedback systems that produce rumbles and vibrations on handheld devices. This technology is expected to improve touchscreen typing through direct feedback to the user's fingers.

Nokia has been late to the touchscreen trend that has swept through the smartphone sector. Apple ( AAPL) became the instant design leader with its introduction of the iPhone two years ago. There has also been modest success from rivals like Research In Motion's ( RIMM) BlackBerry Storm and other touchscreens from Samsung and LG.

The haptic approach to touch feedback would also help Nokia address a major complaint among touchscreen typists who find the virtual keypads far more difficult to use than physical Qwerty keyboards.

RIM's Storm has a clicking touchscreen that confirms key strokes, but users have found the system a bit awkward and prone to mis-types.

Immersion's haptic technology offers a range of bongs, rumbles and vibration bursts to make distinctions between various actions and features on the devices. Immersion has a market cap of $90 million. It posted a net loss of $47.7 million on $36.5 million in sales last year.

Immersion shares rose 21 cents, or 7%, to $3.21 in early-afternoon trading Wednesday.

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