Raju Elangovan considers Nokia’s patent portfolio in light of the agreement the mobile phone company has struck with US giant Microsoft.
Microsoft’s agreement to acquire the mobile phone business of Nokia has generated worldwide opinions, analysis, reports, interviews, estimates, projections and predictions. The business analysts talked about the whys and why-nots of various aspects of the deal.
For our interest, the deal was mainly related to two areas, namely the business and the patents. It is needless to say that the patents are important for any business. But, it has to be emphasized that patents are very significant in the mobile phone/wireless business. The mobile phone business is driven by technology. The changing consumer expectations, and the mortality of the existing technologies, compel the mobile phone companies to adopt ever newer technologies. Technologies with high commercial viability will have high revenue opportunities, even for a company which is losing market share in its core business. So, from our perspective, the important aspect of the agreement is the patents.
Nokia has a very big portfolio of patents, but it is reported that Microsoft acquired only the design patents through the agreement between the two companies. The utility patents are licensed to Microsoft only for a 10 year tenure, with an option for Microsoft to exercise the licensing in perpetuity. Also, Nokia will assign to Microsoft the 60 odd licenses Nokia has granted to other companies. In turn, Microsoft agreed to grant licenses for Nokia to use Microsoft’s patents in the HERE services. The deal created a sensation. But this makes sense only when we understand Nokia’s patent portfolio. For any licensing deal to be successful, understanding of one’s own patent portfolio and the portfolio of the target company is a pre-requisite and without which the licensing exercise will be an accident or will end up as a futile exercise. Request a free trial to read more.