Wednesday, April 7, 2021

Nokia receives patent royalties from Lenovo under license deal settling multi-jurisdictional litigation without proving Nokia owns any actually-essential H.264 patents

Nokia just announced "that it has concluded a multi-year, multi-technology patent cross-license agreement with Lenovo. Under the agreement, Lenovo will make a net balancing payment to Nokia. The terms of the agreement remain confidential. The agreement resolves all pending patent litigation and other proceedings between the two parties, in all jurisdictions."

Lenovo defended itself pretty well against Nokia's patent infringement lawsuits in the U.S., Germany, and India, and brought a FRAND action in the Northern District of California. Nokia had some success in the Munich I Regional Court, but the appeals court stayed the enforcement of an injunction. Another Munich trial was scheduled for July. Last summer, Nokia filed a complaint with the United States International Trade Commission seeking an import ban, but a decision on that complaint would still have taken some more time.

Assuming that there was no clear and present danger of Lenovo being shut out of any market at least until the summer (after the next Munich trial), I venture to speculate that Lenovo agreed to a deal after Nokia lowered its royalty demands. That's the normal course of the licensing business: if the offensive party has a lot of leverage, it can dictate the terms; if it doesn't have a great deal of leverage, at least not immediately, it has to make the deal more attractive to the defensive party. And the more a patent holder depends on licensing income, the greater the pressure to reach an agreement. Nokia needed a deal, and Lenovo eliminated the risk of having to conclude an agreement against the backdrop of an imminent sales ban.

What Nokia hasn't achieved in the Lenovo dispute is to deliver evidence that it holds actually H.264-essential patents. But the portfolio license announced today goes way beyond video codecs.

As for forum selection, it appears likely that Nokia will continue to bet primarily on U.S. district courts, the ITC, the Munich I Regional Court, with other jurisdictions (such as India in this particular dispute) being given a try from time to time.

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