Nokia could pursue Android phone manufacturers over royalty payments once the deal to sell its devices and services unit to Microsoft has closed, as the Finnish company will retain ownership of its valuable mobile patent portfolio.
Microsoft is paying €3.79 billion ($5 billion) for Nokia's handset business and another €1.65 billion for a 10-year licence for Nokia's patents, but is in effect only buying the right to use Nokia's inventions, Reuters reported.
That opens up opportunities for Nokia to license its patents in future, as well as potentially file litigation against Android phone makers it believes have infringed on its intellectual property.
"Once we no longer have our own mobile devices business, following the close of the [Microsoft] transaction, we would be able to explore licensing some of those technologies," Nokia spokesman Mark Durrant told Reuters, although he did not specify any targets.
Nokia also gave Microsoft the option to convert the 10-year agreement to a perpetual license, which Microsoft's general counsel, Brad Smith, said Microsoft would exercise, Reuters added.
"For Nokia to sell the business, and not sell the patents, there must be something else cooking to recover value," Michael Pierantozzi, a partner at Lumen SV, an intellectual property advisory firm, told Reuters.
Patents can certainly add significant value to a deal, and Microsoft may not have been prepared to pay the price that Nokia demanded. Reuters noted that Google paid $12.5 billion in 2011 for Motorola Mobility, a transaction largely driven by the patent value.
CCS Insight noted that although comparisons will be drawn to Google's decision to buy Motorola, "this is a far clearer state of affairs with little ambiguity as to the rationale. That said, patents have played an important role once again."
For more:
- see this Reuters article
Related Articles:
Disgruntled Finns say 'Trojan horse' Elop sold Nokia's devices unit for 'peanuts'
Microsoft to acquire Nokia's phone business for $7.2B
Moody's downgrades Nokia further into junk status
NSN gets a new name as rumours of 8,500 job cuts emerge
Nokia's Q2 fails to assuage concerns, but NSN is a bright spot