Nokia and Samsung Expand Intellectual Property Cross Licensing

As everyone in the information and communications technology (ICT) business is aware, the monetization of intellectual property (IP) is crucial to success. And, as recent headlines have proven time and again, what is at stake can run into the billions of dollars and has been the source of extensive contention and litigation.  For this reason, when companies agree to cooperate rather than, as the famous phrase from the Godfather movie, “go to the mattresses,” it is welcome news.

For this reason the announcement that Nokia (News - Alert) and Samsung have agreed on terms to expand their patent cross license agreement is noteworthy.  Back in February of this year, as a result of an arbitration agreement between the two companies, certain aspects of their patent portfolios were to be shared. The new agreement extends the items to be covered. 

In fact, in making the announcement of the expansion Nokia noted it: “expands access for each company to patented technologies of the other and reinforces Nokia's leadership in technologies for the programmable world. With this expansion, Nokia expects a positive impact to the net sales of Nokia Technologies starting from the third quarter of 2016…Nokia Technologies' annualized net sales related to patent and brand licensing is expected to grow to a run rate of approximately EUR 950 million by the end of 2016.”

Commenting on the expansion, Ramzi Haidamus, president of Nokia Technologies stated:  "With intellectual property portfolios from Nokia Technologies, Nokia Networks and Alcatel-Lucent (News - Alert), Nokia has a wealth of technologies relevant to mobile devices and beyond." He added, "We welcome this expanded agreement with Samsung which recognizes the strength of our assets, and we continue to pursue new licensing opportunities across a number of diverse industries."

The key words in the above are about Nokia’s desire to push into markets beyond those it has traditionally pursued.  This includes recent initiative in the area of digital health and virtual reality, just to name a few.

For those unfamiliar, formed in 2014, Nokia Technologies is the company’s advanced technology and licensing business which is charged with the monetization of the formidable patent portfolio that has resulted from Nokia’s acquisition of Alcatel-Lucent combined with Nokia’s own impressive IP.  Why Samsung (News - Alert) and the expansion go to the heart of Nokia’s stated intentions of being a leader in the connected device area end-to-end.  It also speaks to Samsung’s need to be able to leverage the networking knowledge and IP of Nokia to enhance its offerings.

To use a much quoted cliché, “the bottom line is the bottom line.”  Both companies have wisely chosen the path of cooperation over litigation which can only benefit their pursuits of going after several major emerging market opportunities. This is particularly of importance as the Internet of Things (IoT), virtual reality (VR) and augmented reality (AR) markets explode across a variety of verticals.  Indeed, the Pokémon Go phenomenon is just one example of how fast new capabilities can explode, and no solutions provider wants to be a slow follower.  This is an agreement to keep an eye on as products and services go from being ideas to realization.