TELECOMS : BIG PATENT STAKES BEHIND NOKIA-MICROSOFT DEAL.

 
FREE EXCERPT

With its 3 September acquisition of Nokia's devices and services division, including the Finnish firm's smartphone activity, for 4.1 billion, the American group Microsoft has laid its hands on a fortune in patents. The deal is highly strategic in this respect and explains why Microsoft was intent on buying a mobile phone manufacturer and service provider on the decline.

Nokia is pulling out of this activity because it was outpaced by its competitors after failing to anticipate the boom in mobile phones with built-in cameras. It then missed the boat on smartphones, preferring to invest elsewhere, particularly in the acquisition of patents, where it acted wisely. It thus holds a mountain of 30,000 key patents that have enabled it to stay afloat. The negotiations ahead of the deal with Microsoft separated this intellectual property aspect from that of the manufacture of mobile devices, moreover.

What Microsoft bought - at a price of around one fourth what experts estimated it was worth before the deal - is a package of 2G and 3G patents that are crucial to mobile telecommunications. This element made up one-third of the sale price and is a formidable weapon in the context of the patent war being fought by mobile telecoms players (concerning both software and devices). This means that the Redmond-based firm will have much more fire power, in particular in the battle over FRAND licences (licences for essential functions that are issued by patent holders).

European courts have to rule in cases pitting Samsung against Apple, and Motorola and Google against Nokia and Microsoft, but so does the European Commission, because this conflict generates distortions of competition, argue the complainants. This is compounded by the fact that certain operators - Apple and Google - hold a dominant position on mobile devices.

The EU executive received a complaint from Google, on 31 May 2012, against Nokia and Microsoft, accusing them of conspiring on patents with the aim of using intellectual property to circumvent competition rules in the EU and especially to attack Google's Android system through an organised system of disputes.

According to Google, "Nokia and Microsoft have agreed to push up the prices of mobile devices by creating patent trolls". In intellectual property jargon related to new technologies, this expression refers to a firm or individual specialised in litigation in this area. These people or companies buy patents that they do not exploit...

To continue reading

REQUEST YOUR TRIAL