InterDigital's Handset Haggle

Also-rans rush to court in an effort to challenge wireless leaders Qualcomm and Nokia.
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Legal skirmishes are heating up around the wireless technology inside mobile phones.

Now that cell phones outsell PCs -- and occasionally even fetch higher prices -- a few upstarts are out to test the established players' lock on an increasingly lucrative market.



fired another salvo at


(QCOM) - Get Report

Tuesday, accusing the wireless standard bearer of antitrust violations that contribute to higher cell-phone prices. Meanwhile, shares of patent shop


(IDCC) - Get Report

jumped 6% after the company said an international arbitration tribunal ruled it was due royalties from handset king


(NOK) - Get Report


Nokia pointed out that the arbitration ruling wasn't unanimous and says it intends to evaluate its options.

Industry observers say handsets are gradually taking on more features and functions, making them into mobile media libraries, Net access terminals and navigation tools all in one. In other words, say analysts, the cell phone is fast replacing the PC.

And with so much of the market dominated by Qualcomm, wireless chip giant

Texas Instruments

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and top cell-phone maker Nokia, challenges from smaller shops like Broadcom and patent owners like InterDigital are inevitable and likely to increase.

"These guys have zero market share, so they have nothing to lose and everything to gain by pursuing this," says one New York money manager who has no positions.

Broadcom, for example, with one patent infringement case already filed against Qualcomm, says in a new round of litigation initiated Tuesday that "Qualcomm's monopolistic activities limit competition, stifle innovation, and ultimately harm consumers and service providers."

In May, Broadcom, which makes communications chips including those used for Bluetooth connections in cell phones, charged that Qualcomm was trespassing on its intellectual property. Broadcom says Qualcomm infringed on 10 patents, and it has requested an investigation by the U.S. International Trade Commission into Qualcomm's chip imports.

Investors largely ignored the issue Tuesday, with Qualcomm's shares up 10 cents to $33.70 and Nokia's shares up 2 cents to $16.65.

With so much of the industry in the hands of so few players, the thinking among the challengers seems to be that "if we use enough muscle we might get a piece of the action," says the hedge fund manager.