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Nokia feared to become 'patent troll' following acquisition
Last Updated: 2013-12-09 10:16 | CE.cn
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By Li Hongmei

Following its acquisition by Microsoft, Nokia has been taking advantage of its huge pool of patented technologies to demand payment of royalties by peers.

The new strategy is possible, since Nokia only sold its mobile phone business to Microsoft, at US$7 billion, while retaining ownership of a pool of mobile phone-related patented technologies.

As a result, Nokia has sued major mobile-phone firms, including Apple, Blackberry, HTC, and China's Huaqin for infringement on its patent rights over recent years.

From this strategy alone Nokia has reaped US$650 million of royalty income annually in the last two years, including a US$600 million one-off royalty payment from Apple, which also has to pay certain licensing fee annually in the coming years.

"We have successfully established a complete procedure for patent and technology licensing, which will generate steady revenue and profits for us in the coming years," remarked Risto Siilasmaa, Nokia CEO.

According to the website of the Beijing-based Communications World Weekly, insiders worry that in the wake of the acquisition, Nokia may cash in on its patent assets in an even more radical manner, alleging that the company may become a "patent troll" by recklessly suing mobile-phone firms worldwide, in a bid to maximize its royalty income. The scenario, if it materializes, will spell disaster for the entire communications and mobile-phone industry, according to the CEO of a Chinese mobile-phone company.

In fact, patent trolls have become a major headache for hi-tech industries in recent years, as well as a hot topic being discussed by legislatures, government bodies, and industry insiders worldwide. Backed by their patented technologies, Rockstar, for instance, has sued many mobile-phone firms in recent years and Interdigital has filed litigation against Samsung and other Asian firms. In 2013, over 4,500 companies have been subject to legal action by patent trolls, compared with 500 in 2011. In the US, 62% of ongoing patent-related litigation was filed by companies perceived as patent trolls. A US research body reported that these kind of companies, big and small, inflict US$29 billion of direct damage, or US$83 billion of indirect damage, on the US economy a year.

Insiders noted that Nokia is poised to become a patent troll, since it now doesn't have to consider the effect of litigation over patents on its mobile phone business. Should that become a reality, the Chinese communications and mobile phone industries will become their biggest prey.

According to the website, Chinese smartphone firms now boast over 30% global market share, which is expected to top 50% by 2015. Four out of the world's 10 largest smartphone makers are Chinese firms. Reckless pursuit of maximum patent licensing fees by Nokia may force Chinese smartphone firms, already suffering from a thin profit margin, to retreat from the US, European, and even the Chinese market, the website noted.

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