Nokia’s patent pile was built up with more than €129 billion in research and development spending.
(Markku Ulander Lehtikuva/AFP via Getty Images)
Telecom group Nokia is headed for a payday after it settled a patent dispute with computer titan Lenovo, ending a global legal battle spanning two years and four continents.
Shares in Nokia traded 1.5% higher in the U.S. premarket on Wednesday while its Finnish-listed shares rose 0.5%.
Lenovo stock fell more than 4% in Hong Kong.
The back story. Nokia and Lenovo have been locked in a legal battle over patents since 2019. Lenovo, a Chinese technology giant and the world’s largest personal computer maker, was first sued by the Finnish telecom group over alleged infringement of 20 video coding patents.
Nokia’s legal cases against Lenovo spanned the U.S., Brazil, India, and Germany, with Lenovo countersuing in California. In September 2020, a German court ruled in favor of Nokia, ordering an injunction against Lenovo and banning the sale of its products using Nokia technology in Europe’s largest economy. That order was stayed in November on appeal from Lenovo.
Nokia sits on a pile of patents built up over two decades from more than €129 billion in research and development spending. The company’s patent portfolio comprises around 20,000 patent families—inventions patented in more than one country—including more than 3,500 that have been declared essential to next-generation 5G networks.
Also read:Nokia Is Cutting Up to 10,000 Jobs to Boost 5G Investment. What It Means for the Stock.
What’s new. Nokia said on Wednesday that it had concluded a multiyear, multi-technology patent cross-licensing agreement with Lenovo, putting an end to all pending patent litigation and other proceedings between the two companies.
“The agreement reflects Nokia’s decadeslong investments in R&D and contributions to cellular and multimedia standards,” said Jenni Lukander, the president of Nokia’s patent, technology, and brand licensing business.
The terms of the technology-sharing agreement remain confidential, but Lenovo will make a net balancing payment to Nokia, the Finnish company said.
John Mulgrew, Lenovo’s chief intellectual property officer, said the agreement with Nokia “reflects the value of both Nokia’s technology leadership and Lenovo’s continued investment in 5G innovation.” Mulgrew added that the accord will facilitate future collaboration between the two companies.
Plus:5G Is Still Coming Despite Covid-19. These Are the Stocks Set to Benefit First.
Looking ahead. Intellectual property battles are expensive and hard-fought. While the ruling of the German court in September 2020 was a sign that Nokia may have had the upper hand, it was always going to be a long road to any legal victory. With their dispute aside, Nokia and Lenovo can turn to a more productive relationship through patent cross-licensing.
And while the terms of the deal weren’t disclosed, a payday of any kind is welcome news for Nokia. The group’s profit margins are under pressure, and it has already embarked on a €600 million cost-cutting program aimed at boosting investment in 5G, including shedding up to 10,000 jobs. A cash injection from the legal settlement should add buoyancy to the balance sheet.
