Bloomberg - Nokia Oyj, moving to expand its profitable licensing business beyond smartphone makers, is learning that its old ways of negotiation may not always work.
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Having recently been preparing for talks with other automotivemakers to make them pay for its innovations used in connected vehicles, Nokia is now tussling with manufacturers of the same devices to make them pay for their inventions. These gadgets, which are expected to proliferate with 5 G technology, will let consumers turn on the dishwasher from their morning commute and farmers monitor crops, livestock and equipment from their phone. In doing so they ll use cellular connectivity technology that Nokia continues to invest in and helped pioneer.
With a strong portfolio of patents for 5 G and 6G technology, Nokia is approaching would-be licensees and being met with some resistance, Jenni Lukander, president of the company's technologies unit, said in an interview.
Some of these companies simply take the view that they don t want to take a license until somebody takes away from them, she said.
Depending on the industry, licensing deals will vary based on what works in each category, she said without giving specifics. It is still very early days and we test this market, but in the future it will be a good opportunity. Licensing accounts for about half of Nokia profits, and the company wants to ensure these earnings are sustainable. But the Finnish and many consumer device manufacturers disagree on who should pay for.
When Nokia began demanding royalties from the expanding market for connected cars, automakers balked pushing responsibility to part suppliers. That is the way auto industry has always worked, with component makers dealing with royalty agreements. Nokia argued that a piecemeal approach doesn t work since its technology in the vehicle is integrated in so many ways.
After a lengthy fight, Daimler AG acceded to Nokia s demands, an agreement that Lukander says can be emulated with other auto companies and industries. One of Daimlers supplier, Continental AG, continues to pursue litigation, a sign that Nokia might have more battles.
Part of the friction is economic - and cultural - most industries aren t interested in the common patent licensing disputes among telecommunications companies, though Nokia's name recognition might help, said Steve Skelley of Folio Law Group. He negotiated with Intellectual Ventures in his previous job working for Nokia patent licensing firm Nokia.
The concept of having to train a market is real, Skelley said, if you are attempting to license companies in an industry that is not familiar with the patent owner. Nokia has unreasonable negotiators, so they don't come in with savvy demands. At Nokia, licensing has grown more important over the past decade since Nokia stopped making phones and focused on networking gear and intellectual property. While the company doesn t break out the source of its patent revenue by industry, it continues to rely heavily on royalties from its inventions used in the $378 billion global smartphone market.
Smartphone license is the far bigger opportunity for us, and I think it will be so, Lukander said. Almost everyone has a smartphone and not everyone has a car, for instance. Over the years, Nokia has been embroiled in high-profile disputes, including its ongoing battle with former brethren Oppo Co. a Chinese handset maker. In an effort to limit potential conflicts, the company has released some of its rates and joined with rivals Qualcomm Inc. and Ericsson AB to create a one-stop licensing shop for 2 G, 3 G and 4 G technology.
Lukander said that the vast majority of our dealings and agreements are actually signed completely, speaking in tongues.
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