Ailing Nokia falls back on patents legacy

Sun May 13, 2012 5:03am EDT
 
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By Tarmo Virki, European Technology Correspondent

HELSINKI (Reuters) - Desperate for cash to tide it over until sales ramp up of new products, Nokia Oyj NOKIV.HE is stepping up its quest for royalties from rivals using its designs as the basis of their technology.

Nokia already earns 500 million euros ($647 million) a year from its patent royalties in key areas of mobile telephony and some analysts say a more determined application of its patent rights could boost its income by hundreds more millions of euros a year. Alternatively, a sale could generate billions of euros.

Either way, at a time when its future is being threatened by falling sales and a loss of market share, Nokia's patents have emerged as the struggling company's most valuable and stable assets. Their full exploitation could be crucial for its longer-term survival.

"They should be doing this. The only questions is: why did they wait so long?" said Alexander Poltorak, chief executive of patent consultancy General Patent Corp.

Nokia has already served warning to newcomers in the mobile industry with whom it doesn't yet have licensing agreements, saying it aimed to boost its royalty revenue. Last week it took action against two makers of devices based on Google Inc's (GOOG.O: Quote) Android software.

Nokia sued HTC 2498.TW and ViewSonic for infringing its mobile technology and software patents, and others using Android are likely to be among the next targeted. Analysts say it's likely soon to go after top Chinese and Indian vendors, as well as Kindle-maker Amazon.Com Inc (AMZN.O: Quote).

"I would expect its next targets to include ZTE (000063.SZ: Quote), Huawei HWT.UL and Micromax," said analyst Tero Kuittinen at Finnish mobile firm Alekstra.

Nokia declined comment on other possible targets but spokesman Mark Durrant said in an email: "It's clear from last week's press release about actions against HTC, RIM and Viewsonic that we are taking new steps, moving beyond essential patents to other patents for which we have no obligation to license at all."   Continued...

 
Illustration picture shows Nokia logo on used cell phones, in Zurich, April 30, 2012. REUTERS/Christian Hartmann