European Regulator Warns Nokia Not to Become a Patent Troll

EU Hopes That Nokia Will Not Convert Into a Patent Troll

by Anton Shilov
12/11/2013 | 10:53 PM

According to some studies, 40% to 60% of all patent lawsuits in the U.S. are initiated by patent trolls – including prominent ones targeting retailers and small businesses. For a variety of reasons, patent trolls have been less active in Europe than in the U.S. However, this could change in the future. For example, after selling off its devices and services division to Microsoft Corp., Nokia will retain thousands of important patents, will not market its own devices, but will license intellectual property.

 

Back in September this year Microsoft Corp.and Nokia Corp. announced a transaction whereby Microsoft will purchase substantially all of Nokia’s devices & services business, license Nokia’s patents, and license and use Nokia’s mapping services. Following the transaction, Nokia plans to focus on its three established businesses, each of which is a leader in enabling mobility in its respective market segment: NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing.

Since Nokia will retain its patent portfolio, some have claimed that the sale of the business unit would give the company the incentive to extract higher returns from this portfolio by taking legal actions against various companies and enforcing them to pay extra for standard-essential patents. Moreover, there are concerns that the remaining of Nokia will simply focus on licensing and enforcing patents, not creating innovative products or technologies. While this assumption is only a speculation, regulators from Europe cannot really ensure that this will never happen.

“When we assess a merger, we look into the possible anti-competitive impact of the company resulting from it. We cannot consider what the seller will do. If Nokia were to take illegal advantage of its patents in the future, we will open an antitrust case – but I sincerely hope we will not have to. In other words, the claims we dismissed were that Nokia would be tempted to behave like a patent troll or – to use a more polite phrase – a patent assertion entity,” said Joaquín Almunia, vice president of the European Commission responsible for competition policy.

Given the fact that Microsoft takes over various Nokia Research units, Nokia will have limited capabilities to research and develop new technologies. Moreover, without own manufacturing facilities, it will be pretty hard for Nokia to commercialize its inventions itself. As a result, the company will only be able to earn revenue by licensing its tech to other companies.