Friday, December 21, 2012

RIM recognizes strength of Nokia's patent portfolio and signs up for a new license

BlackBerry maker Research In Motion (RIM) has agreed to make a one-time payment as well as ongoing payments to Nokia for a license to the latter's patent portfolio. Since August I had reported on various Nokia v. RIM hearings at the Munich I Regional Court, most of which went pretty well for Nokia, as well as on Nokia's recent arbitration win, which appeared to entitle Nokia to sales bans against RIM's WiFi-implementing products due to the terms of an earlier license agreement that was up for renewal.

The announcement is unambiguous that money is flowing from Canada to Finland, and only in that direction. Once again, Nokia emerges the definitive winner of a patent dispute, as it did against Apple in June 2011.

The agreement apparently covers standard-essential patents (SEPs) as well as certain non-standard-essential ones. In the SEP context, there was no indication of a licensing issue with cellular patents, only about WiFi (WLAN) due to expiration of a related agreement. Now that Nokia and RIM have a new deal in place, all of the pending litigations (the ones to enforce the WiFi SEP-related arbitration ruling as well as various infringement actions over non-SEPs) will be withdrawn immediately.

When Nokia filed its infringement actions against RIM in May 2012, it also sued HTC and ViewSonic. I have also reported on some of the related hearings and trials, including a Mannheim trial that took place a week ago over a patent assertion against the Google Play app and content store. The fact that RIM has settled increases the likelihood of HTC and ViewSonic also opting to respect Nokia's intellectual property. Actually, HTC and Nokia can work together quite well when they want to: they have been closely coordinating for some time their defense against patent monetizer IPCom.

Presumably, Nokia is interested in license deals with the wider Android ecosystem, but HTC and ViewSonic are the first two Android device makers Nokia has sued, so once one or both of those companies sign up, Nokia will be able to accelerate its licensing program. I'm also wondering whether ASUS has meanwhile taken a license to Nokia's patents, at least to Nokia's SEPs. Six months ago it became known that the Nexus 7 tablet, which ASUS builds for Google, may infringe Nokia IP. License deals aren't always announced, so maybe Nokia and ASUS have reached an agreement without making any noise about it.

Android device makers have already taken at least 17 royalty-bearing licenses to third-party patents (16 companies licensed from Microsoft, and HTC's deal with Apple). Nokia is also going to sign many such agreements. And even though RIM lost the fight with Nokia, it might increasingly look to assert its own patent portfolio against Android device makers with weaker portfolios. RIM definitely needs the money and large shareholders probably pressure management to monetize its patent portfolio. By collecting royalties from even weaker rivals, RIM could refinance some if not all of the costs of the Nokia deal.

Google clearly takes Nokia's patents very seriously. It is an intervenor in the ITC investigation of Nokia's complaint against HTC, and in at least four German Nokia lawsuits (over Google Play and Google Talk), and Google's director of litigation personally flew to Germany to attend a couple of court hearings and a trial.

With RIM having chosen licensing over litigation, it's up to HTC, ViewSonic and other Android device makers to follow suit. Nokia's royalty demands are apparently quite reasonable. Otherwise it wouldn't have done dozens of deals, including the settlements with Apple and RIM.

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