Nokia Corporation (ADR) (NOK) Signs Multi-Year Deal With WiLAN
July 08, 2014, 9:45 am
Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) reached a multi- year deal with WiLAN under which the former receives a license to a portfolio of WiLAN’s wireless technology patents. Nokia Networks already uses WiLAN’s patented wireless technology in a number of infrastructure products like production and marketing of wireless handset products.
The patents that come within the ambit of the deal are CDMA, WCDMA, GSM, HSPA and 4G/LTE wireless technologies. Apart from this both the companies entered into another deal by which WiLAN is entitled to several of Nokia Network patents that are related to its existing and upcoming wireless technologies.
WiLAN CEO Jim Skippen said in a statement, “We are very pleased to have negotiated this license with Nokia Networks. It underscores the value of the technologies that we have added to our portfolio of wireless products.”
Skippen said that Nokia has been active in the development and commercialization of the wireless communication technology for over decades. The CEO added that the acquired patents will boost company’s portfolio and will be helpful in signing future license.
Interesting deal for Nokia Networks. WiLan launched a hostile takeover for Mosaid (now Convergent) soon after Mosaid acquired Core Wireless in 2011. Core Wireless is the Luxembourg company created by Nokia and Microsoft in 2010 to house 2,000+ wireless patents. Mosaid/Convergent was later bought out by a private equity firm for around $590 million, but they had to get support from Nokia and Microsoft because each company owned 50% of the royalty stream to be generated by Core Wireless. The current split is now 25% to Convergent with Microsoft and Nokia splitting the 75%. Now WiLan finally has the Nokia wireless patents it wanted to get in 2011. Let's see if they can monetize these patents better than Convergent, which doesn't seem to have done much with it despite having the largest number of privateered Nokia patents out of the 20 or so such deals that Nokia has done.
So far Pendrell (129 patents) and Vringo (500 patents) are the first ones to monetize their acquired Nokia patents - Vringo with their ADT/Tyco settlements and Pendrell with their Samsung deal. Vringo has 3 or 4 injunctions against ZTE and MobileMedia has won a jury decision against Apple over that 1995 Nokia camera patent. Nokia gets 25% of all monies after the first $22M (sale price of 500 patents) in the Vringo deal. They get 26.5% of all monies in MobileMedia. Other than the creation of Helsinki Memory, no details have been released about the Pendrell deal although I think it is fair to assume Nokia retains a percentage of the royalties because that has been typically the way they structured the deals they have disclosed.
A few million in recurring royalties here, a few million in recurring royalties there and pretty soon those will add up to real money, all at little or no cost to Nokia.
I've followed Vringo for a long time. I was not aware that Nokia was the original holder of the ADT\Tyco litigation patents. I still can't believe that those settlements are sealed. Just $1 dollar a device would be an obscene amount of money. The ZTE cases have grown increasingly interesting with all the injunctions that Vringo has secured. ZTE understands the value of patents and has many cross licensing deals. I really feel like there is a lot of legal posturing underway right now before ZTE feels like they can reach a fair licensing fee.
So in addition to NSN, NGP, HERE and AT, we have other companies creating cash flow for NOK while NOK has no expense. NOK seems to be going after only business with high margins. Even NSN appears to be walking away from the low margin end of the infrastructure business. That is a bold move in an industry where many others seen to want top line growth regardless of the hit to the bottom line. Cool! GO NOK!