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With patents, Nokia and Ericsson hit phone makers with sales bans

In recent days, Nokia managed to persuade a German court to ban the sale of OPPO smartphones in that country. Separately, Ericsson managed to persuade a Colombian court to ban the sale of Apple phones in that country.

The developments help highlight Nokia and Ericsson’s efforts to conclude lucrative new patent licensing agreements for 5G networks worldwide. Both companies have recently seen their patent licensing revenue decline, and both have suggested that their pursuit of new 5G patent agreements will help reverse the situation.

However, they certainly meet stiff resistance. For example, as reported by Foss Patents, Apple has taken some relatively unusual legal steps recently to respond to Ericsson’s patent attack. The publication noted that Apple, shortly after the ruling in Colombia, filed an emergency petition in Texas for damages against Ericsson, in an attempt to deter Ericsson from pursuing the Colombian ban. Separately, Apple filed its first-ever lawsuit asserting essential patents (SEPs) in a German court. The lawsuit against Ericsson is based on a patent that Apple obtained from Intel, and essentially represents leverage that Apple can use against Ericsson in the ongoing patent licensing battle between the two companies.

(Source: Rhea Eason/Almy Photo Gallery)

(Source: Rhea Eason/Almy Photo Gallery)

The subject of contention is billions of dollars in patent licensing fees. Nokia and Ericsson both played a leading role in developing the 5G standard, and now they are looking to obtain licensing revenue from other companies – such as Apple and Oppo – that make phones allegedly benefiting from these patents.

Ericsson reported about $130 million in its latest patent licensing quarter, but cautioned that this number was “impacted by several expired patent licensing agreements awaiting renewal and 5G licensing negotiations.”

“We are confident of our strong position in the 5G space and our leading patent portfolio, which put us in a good position to complete pending and future license renewals,” Ericsson said in its earnings statement.

Nokia also said it was “confident of the strength of the patent portfolio.” But the company noted that licensing revenue in the fourth quarter was lower than expected due to the “impact of the timing of the license agreement renewal.”

Nokia registered a patent agreement with China’s Lenovo last year, but has so far sued China’s Oppo in 11 different countries, according to the South China Morning Post.

Ericsson and Nokia both think they owe several dollars for every 5G phone. Perhaps not surprisingly, phone makers like Apple and Oppo have rejected this idea.

Demons are in the details

Interestingly, Foss Patents notes that the actual terms of these licensing agreements can vary based on the size of the companies involved and the markets in which they do business.

“It’s very common for parties to agree on fixed royalty amounts, such as $100 million per calendar quarter. It’s convenient: the executor doesn’t have to file equity reports, and the licensor doesn’t have to do reasonableness checks. [on the number of phones sold] Or even audits. The publication noted that the licensor has some predictable recurring revenue.

However, there are also drawbacks to such established agreements. For example, in the battle between Oppo and Nokia, such an agreement may not be responsible for Oppo’s successes in the phone market. According to the publication, Nokia may have “rejected a lump-sum deal because it feared that it would eventually receive a very low royalty on a per unit basis”.

Thus, with money at stake, it is no surprise that patent licensing negotiations have involved dozens of lawsuits and courtrooms around the world. Recent reports speculate that Apple may continue to rely on Qualcomm’s 5G chips in its iPhones for legal rather than technological reasons.

After buying the smartphone chip business from Intel in 2019, it was widely expected that Apple would eventually develop its own 5G chip in order to weed out the need to buy such products from Qualcomm. However, a recent rumor suggests that Apple will continue to use Qualcomm’s 5G chips for the foreseeable future. Some patent experts believe that part of the reason Apple is doing this is to avoid infringing on Qualcomm’s extensive 5G patent portfolio.

Qualcomm, Nokia and Ericsson are not the only companies seeking patent licensing agreements with Apple. InterDigital’s deal with the iPhone vendor expires in the third quarter, according to a recent IAM report. But InterDigital’s new CEO, Liren Chen, believes the company will be able to sign a new agreement with Apple.

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– Mike Dano, Managing Editor, 5G & Mobile Strategies, Light Reading | Tweet embed