Focus analysis丨Behind Nokia’s intensive patent litigation battle, there is a game between business and technology

Behind patent disputes is not only a game between technology research and development and commercial returns, but also a fight for the right to speak.

Although Nokia, which has been out of sight for a long time, has been losing ground in the mobile phone business, it has been a fish in the water in patent litigation.

Recently, it was reported that Nokia initiated patent infringement lawsuits against mobile phone manufacturer OPPO in the United Kingdom, France, India and other countries. The two companies signed a global 4G patent cross-licensing agreement in November 2018. The focus of the dispute between the two parties is the issue of how to collect patent fees.

OPPO responded to the media saying that Nokia advocates extremely unreasonable licensing fees and has made OPPO take steps in licensing negotiations through litigation. “OPPO respects and protects its own and third-party intellectual property rights, and opposes unreasonable consultations such as litigation as a tool. behavior.”

In the communications field, where technology patents are densely covered, related patent litigation is not uncommon. Among them, mobile phone manufacturers with annual shipments of hundreds of millions of units often become the “fat sheep” for patent holders. In the past, mobile phone manufacturers such as Samsung, Apple, Huawei , and BlackBerry have had intensive and protracted patent lawsuits with suppliers such as Qualcomm, Ericsson, and Nokia.

Behind the patent disputes of various companies, the patent litigation battle in the communications field is also a commercial secret battle without gunpowder.

Patent battle, Nokia’s new wealth code

Although Nokia has lost ground in the transition from feature phones to smart phones, and its mobile phone business has frequently sold to Microsoft and HMD Global, Nokia quickly found the next easier business experience.

In the past ten years, Nokia has launched a protracted “litigation war” against major mobile phone manufacturers around the world. Public information shows that Nokia has sued mobile phone companies such as HTC, Apple, Samsung, and BlackBerry.

Nokia, who is well- versed in the road , is a victorious general in patent litigation. Nokia’s frequent litigation battles are based on the fact that it has accumulated necessary patent technologies for communication standards from 2G to 5G in the past ten years of development.

According to data released by Nokia in 2020, in the past 20 years, its R&D expenditure on innovation and standardization reached 129 billion euros, and R&D expenditure has skyrocketed in 2019 because of 5G. In terms of the number of patents, Nokia also has an overwhelming tendency. Taking 2014 as an example, Nokia’s patent authorization is 7 times that of Apple and eight times that of HTC.

Focus analysis丨Behind Nokia's intensive patent litigation battle, there is a game between business and technology

Source: unsplash

Obtaining high patent fees through various litigations and advancing patent cooperation agreements have become one of the main sources of income for Nokia, Ericsson or Qualcomm today . Nokia has previously stated publicly that in the two years from 2016 to 2018, Nokia’s cash income through patents exceeded 1.3 billion euros.

Qualcomm, Ericsson, and Nokia rely more on monetization technology research and development to charge fees, and some patent abuse chaos has also emerged in the industry . The business model of some “patent rogue” companies is like this: they are not engaged in technology research and development, but by acquiring old patents that have not expired from various places, they “hold up” the companies that use these patents.

However, the main reason why patent litigation can frequently occur in the communications industry is that communications technology patents themselves are not standard products, and there is a lot of room for bargaining in the upstream and downstream patent billing methods.

Generally speaking, Qualcomm, Huawei, Ericsson and other patent holders set the licensing fee rate based on the total selling price of a mobile phone. Taking Qualcomm as an example, mobile phone manufacturers using Qualcomm chips not only pay the purchase cost of Qualcomm chips, but also pay an additional 5% of the total price of the mobile phone to Qualcomm for authorization fees-this additional charge is called “Qualcomm Tax” by the industry.

For Qualcomm, the more popular downstream mobile phones are, the more you earn; but for mobile phone manufacturers, Qualcomm, Ericsson, and Nokia, which cannot be bypassed, also bring high costs to mobile terminals.

Intel once issued a report stating that the patent fees of a 4G mobile phone stack up and account for almost 30% of the price of the mobile phone  4G mobile phones only need to be used for cellular communication by four patent companies: Nokia, Qualcomm, Ericsson, and Interdigital. Charges, and also need to add Bluetooth and WIFI patent fees.

Hungry and skinny mobile phone manufacturers, fattening patent holders. This can also be traced in the financial reports of various companies. Taking 2020 as an example, Nokia’s patent revenue accounted for 6% of total revenue, reaching 11.19 billion yuan; Ericsson’s 4%; with the “Qualcomm Tax” card Qualcomm, which is the neck of various mobile phone companies, accounts for a staggering 21% of its patent revenue.

Mobile phone companies that are not short of money choose fierce countermeasures

For patent disputes, a small number of mobile phone companies resort to gentle negotiations, but most mainstream mobile phone companies, including Apple and Samsung, are more inclined to deal with fierce litigation.

Patent litigation has always been a protracted tug of war. In the past, the drama that was constantly performed was that after appeals and trials, the defendant would choose to appeal one by one, and the lawsuits often lasted for as little as two years, or even ten years.

Regardless of whether it is Nokia, Qualcomm, or Ericsson’s litigation battle against major mobile phone companies, the final result of the lawsuit is the same. Every mobile phone company will basically choose to settle and compromise, obediently send hundreds of millions of euros in patent compensation to Nokia, Qualcomm, Ericsson and other patent owners, or sign a patent cooperation agreement.

Despite this, mobile phone companies that are not short of money in the past chose to respond toughly by appointment.

There is a paradox in the original charging model. A mobile phone is a product of multiple hardware combinations, and whether it sells well is not determined by a single piece of hardware. In a long-running chip patent lawsuit with Qualcomm, Apple has spoken out the voice of many mobile phone manufacturers. At that time, Apple proposed that the iPhone had previously increased the price of the whole machine through revolutionary innovations such as Touch ID, which had nothing to do with Qualcomm, but Apple had to pay higher patent fees for it.

In fact, mainstream mobile phone companies are not short of money. For mobile phone companies, in fact, the winning or losing of individual litigation is not very important. The money should be paid back, but if the litigation time is prolonged, the impact on the income of the patentee will be different.

The previous case was that when the litigation falls into a tug of war, it may seriously affect the patience of the patentee and investor. On the day Nokia announced its lawsuit against Apple in 2016, Nokia’s stock price fell more than 4%. At that time, some analysts believed that the legal proceedings between Nokia and Apple may be delayed for many years, thereby affecting Nokia’s royalty revenue.

The market value of companies such as Nokia and Ericsson still lags behind that of Apple and Samsung. Time is one of the weapons that mobile phone manufacturers use to fight back.

Focus analysis丨Behind Nokia's intensive patent litigation battle, there is a game between business and technology

5G patent number ranking source: IPlystics

But on the other hand, mobile phone companies are also stepping up to register patents to reverse the passive status of patents .

According to the data provided by OPPO, as of the first half of this year, OPPO’s global patent applications exceeded 65,000, and the number of invention patent applications exceeded 58,000. Invention patent applications accounted for 90% of all patent applications. Earlier, when OPPO was sued overseas by Sharp, OPPO counterclaimed Sharp infringement of its flash charging technology patent in Tokyo, Japan, and continued to file invalid applications for multiple patents of Sharp China.

The world of business has no permanent enemies. Under the trend of interest, even Apple, Microsoft, and Ericsson that have experienced discord can turn their enemies into friends and form a patent community to unify the outside world.

Apple previously united with Ericsson, Microsoft, BlackBerry, Sony and other companies to form an organization called “Rockstar”. Nearly 10,000 patents were taken from the bankrupt Canadian Nortel Networks. This agency turned around and sued Google , HTC, Samsung and other Android manufacturers. Google has also publicly accused Rockstar of being a “patent hooligan supported by Apple.”

From the perspective of patent-holding companies, combating patent abuse seems to be a necessary means to maintain technological beliefs, as well as a means to make money.

But in the final analysis, behind the intensive patent disputes in the communications industry is not only a game between technology research and development and commercial returns, but also a fight for the right to speak. In the 5G era, this competition will be even more intense.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/focus-analysis%e4%b8%a8behind-nokias-intensive-patent-litigation-battle-there-is-a-game-between-business-and-technology/
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