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Nokia, flexing its muscles as a mobile technology patent powerhouse, is taking action to put some of its more enviable assets to better work for it as its top executives look to improve the companys bottom line.
While Apple now pays Nokia for each iPhone it sells, a number of other manufacturers aren’t likewise paying up for their use of Nokia-patented technologies, the Finnish phone maker alleges, and so on May 2 it started on the offensive, filing cases in the United States and Germany against HTC, BlackBerry maker Research In Motion, and Viewsonic related to 45 patents.
The patents relate to technologies such as the power-saving functionality of GSM devices, over-the-air synchronizing of a mobile calendar, an integrated light sensor for regulating screen brightness, and the wireless synchronization of databases such as calendars using filters or a data range.
HTC and Viewsonic both support Google’s Android OS, and Nokia says they infringe on its “mobile technology and software patents,” The Guardian reported May 14, adding that if Nokia can get half of the Android phone makers to pay up, it could see an extra $800 million each year, though cross-licensing deals Nokia already has with some of them makes that figure “unlikely.”
Nokia’s patent portfolio is on par with those of Qualcomm and Ericsson, said The Guardian report, making it one of the largest in the industryand prompting the question of what made the company and its executives wait so long. Posting a first-quarter 2012 net loss of approximately $2 billion U.S., it could certainly use the extra income.
One answer is that it first needed to put its two-yearand more importantly, successfullegal battle with Apple behind it.
“Nokia demonstrated that it means business when it starts patent lawsuits,” intellectual property analyst Florian Mueller wrote on his FOSS Patents blog, in regard to its dispute with Apple, following Nokia’s announcement of the new lawsuits. Mueller continued:
“Compared to Apple, the defendants in the latest action are not only financially much weaker but they also lack Apple’s retaliatory powerif any of the three brings any somewhat useful wireless-related patents to the table, it’s RIM, but the focus of these assertions is on HTC and ViewSonic anyway. I think these disputes won’t take as long as the Nokia-Apple battleand on a per-device basis, HTC and ViewSonic will likely end up paying significantly higher royalties than Apple, which brought more IP of its own to the negotiating table.“
Roger Kay, principal analyst with Endpoint Technologies, says that Stephen Elop, who left Microsoft to become CEO of Nokia in September 2010 is another factor, as the “personality” of Nokia changed completed when Elop took over.
Being a Microsoft guy, [he’s] highly focused on intellectual property, licensing and patent portfolio monetization, Kay told eWEEK by email. There may have been some sensitivity related to the Apple case, but Nokia, like most other large patent holders, needed to figure out what it had and develop a strategy to derive value from it.
Kay added that: The patent system, which is arguably completely broken and rather than protecting innovation stifles it, serves those with lots of patents. Nokia is definitely among that elite group and is now asserting its right to a place at the licensing-fee table.”
A third factor is that Nokia is becoming more Americannow shouting, as it were, where for years it has instead chose to discretely leverage its patent portfolio.
As the global mobile industry has become more Americanized in recent years, so the approach to mobile patent licensing has also become more Americanized, with a growing focus on lawyers sweating harder their patent portfolios to obtain maximum perceived value, said Neil Mawston, executive director of Strategy Analytics Global Wireless Practice.
Nokia is currently in the process of becoming culturally less European and more American, so it can better conquer the important U.S. market where it has lagged for so long, Mawston added. Taking a more aggressive stance on asserting its major and minor patent portfolios is one element of that cultural transition.
Nokia officials, during the company’s first-quarter earning call, said they would look to better leverage the companys patentsa remaining bright spot as Nokia market share and sales dip and disappoint.
“We can look at certain patent family combinations where we can take some patents that are valuable, but that could be more valuable outside Nokia than inside the company, but still keeping our strength,” Nokia CFO Timo Ihamuotila said during the call, adding that it’s “unrealistic,” given Nokia’s current business model, that it could somehow sell off its whole intellectual property rights (IPR) portfolio.
Analysts have noted that Nokia’s patents could be worth far more money on a royalty basis than on sale.
According to The Guardian, other possible lawsuit targets for Nokia could include Android-supporting handset makers ZTE, Huawei and Micromax, as well “top Chinese and Indian vendors” and Amazon.com, which uses a version of Android on its Kindle Fire tablet.