Monday, January 23, 2023

Nokia announces 5G patent license agreement with Samsung: details unknown, 'multi-year period'

Nokia just announced a new patent cross-license agreement with Samsung. The previous agreement expired "at the end of 2022" according to Nokia's press release; the new contract term starts on January 1, 2023, and "Samsung will make payments to Nokia for a multi-year period."

The last announcement of a Nokia-Samsung renewal was about four years ago. Prior to that one, the parties agreed to have the financial terms set by an arbitration panel (which is what Samsung recently agreed upon with InterDigital). So far, Nokia and Samsung have always been able to avoid infringement litigation.

Nokia's press release contains the following quote from Jenni Lukander, President of Nokia Technologies:

"Samsung is a leader in the smartphone industry, and we are delighted to have reached an amicable agreement with them. The agreement gives both companies the freedom to innovate, and reflects the strength of Nokia’s patent portfolio, decades-long investments in R&D and contributions to cellular standards and other technologies."

In September, Mrs. Lukander gave a presentation in New York City, explaining Nokia's IP strategy (particularly also its growth strategy) to financial investors and analysts. She said that Nokia was facing the need to renew various license agreements in the fiscal quarters ahead. Certainly Samsung was a major item on the list, and that one has been crossed off in a positive way for Nokia.

Samsung is known to negotiate hard, but constructively. It is interesting to see that the parties kept negotiating for another three weeks after the expiration of the previous agreement instead of resorting to litigation. By contrast, Nokia sued OPPO a couple of days after the previous license agreement expired in mid-2021.

In December it became known that Samsung recently (and silently) extended its patent license agreement with Huawei, a company that has become a net licensor without even treating patent licensing as a strategic business area.

What is unknown is when Nokia's current patent license agreement with Apple will expire. From industry circles and analysts I've heard different views. According to some people, the agreement would have expired last summer, but Nokia's numbers don't suggest that Apple stopped paying. Currently, the most likely dates of expiration would be the end of this year or the middle of next year, given that the last renewal was in mid-2017 (and the related agreement had expired at the end of 2016).

The biggest renewal problem that Nokia is facing as we speak is the situation with OPPO. Nokia has recently lost more decisions than it won. Where Nokia has leverage, OPPO has left the market; where OPPO sells large numbers of phones, Nokia lacks leverage so far. Nokia accuses OPPO of hold-out, and OPPO gave Juve Patent the following quote:

"OPPO has committed to enter into a licence with Nokia on the FRAND terms that the Chongqing court will set in the ongoing rate setting proceedings between the parties. Nokia has so far been unwilling to renew its licence with OPPO on fair and reasonable terms. However, OPPO hopes that Nokia will now fully engage with the Chongqing proceedings and confirm that it will honour its FRAND undertaking by similarly committing to enter into a licence on the terms set, in order that this dispute can be brought to an end."

Nokia is also embroiled in litigation with vivo, another Chinese smartphone maker that has a limited presence in Europe and largely serves other geographic markets.

The terms on which Nokia agreed with Samsung are unknown, and Samsung's gadgets have a higher average price than OPPO's and vivo's products, which is why I can't tell whether the agreement announced today will impact Nokia's negotiations with OPPO and vivo, such as the Chinese FRAND determination case that is underway in Chongqing.