Nokia settles with HTC, adds to Patent War Chest

After two years of litigation in seven countries involving more than fifty of Nokia’s non-essential patents, Nokia announced a global settlement with HTC that should conclude all patent litigation between the two companies, but add to fears that Nokia is transforming itself into a formidable patent troll.

The announcement came this past Friday, just days after Nokia scored its fourth victory over HTC in a German court (three in the past two months) and days before the U.S. International Trade Commission was scheduled to review a preliminary ruling finding HTC infringed two of Nokia’s U.S. patents.

Although Nokia and HTC have a “long standing” agreement concerning licensing of Nokia’s patents that are deemed essential for practicing industry standards, Nokia has been battling with HTC over non-essential patents since Nokia fired the first shot in 2012, followed by victories in England, Wales, Munich, Mannheim and the U.S.

The old Nokia sold over 1 billion mobile phones worldwide, ranking number one in sales for 14 straight years, but the company began a steady decline ever since Apple launched the iPhone in 2007. In 2009, Nokia posted its first quarterly loss in more than a decade. In 2010, it began slashing jobs, hired a former Microsoft executive as CEO and announced plans to incorporate the Window’s operating system on its new phones. The company then slashed several thousand more jobs and finally, in September 2013, sold its mobile phone business to Microsoft for $7.2 billion.

However, Nokia excluded from the Microsoft deal its portfolio of 39,000 patents, which is considered among the strongest patent portfolios in the industry. Nokia announced that it saw “good opportunities” to profit from the patents, but Vice President of the EU, Joaquin Almunia, warned in December 2013 that, “if Nokia were to take illegal advantage of its patents in the future, we will open an antitrust case.”

So it was notable when Nokia announced that the HTC settlement also includes a patent and technology collaboration agreement, involving HTC’s 4G LTE (Long-Term Evolution) patents, “further strengthening Nokia’s licensing offering.” HTC will be required to make payment to Nokia for an undisclosed sum and can finally get back to the business of making cell phones, but other companies will now face an increased threat from Nokia, the patent assertion entity.

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