Nokia’s patent dispute persists in China despite deal with one smartphone maker

By Anne Kauranen

HELSINKI (Reuters) – Finnish telecom equipment maker Nokia said on Thursday it had signed a 5G patent agreement with one of China’s leading smartphone makers Honor, but its legal battles with other Chinese companies over patents continue.

Nokia, once the world’s number one mobile phone maker, holds a significant patent portfolio of some key technologies needed in phone manufacturing and the resulting licensing revenue represented 39% of operating profit in 2022.

Nokia has been in legal disputes with Chinese device makers Oppo and Vivo in various countries over the use of 4G and 5G patents since 2021 which have not been resolved, a source familiar with the matter said.

The Finnish company welcomed the “amicable” agreement with Honor, previously a unit of U.S. sanctions-hit Huawei Technologies, after a recent set-back in China where a local court sided with Oppo in its demand for lower royalty rates for Nokia’s technologies, South China Morning Post reported.

“It is the fourth major litigation-free smartphone agreement that Nokia has concluded over the past twelve months,” Nokia’s Chief Licensing Officer Susanna Martikainen said in a statement, referring to the Honor deal.

Wenyu Zhou, Head of Global Intellectual Property at Honor said: “Honor highly respects Intellectual Property [IP] rights and strongly believes that reasonable value of IP is important to the development of mobile industry.”

Oppo said of the Chinese court ruling, “[it] provides clear guidelines for 5G standard essential patent royalty rates for participants in the global communications industry… the ruling also holds significant implications for similar cases.”

On Dec 30, Nokia said it would not meet its financial targets for the year 2023, as it cannot recognize revenue it would make from license renewal discussions that are expected tocontinue well into 2024.

“While there have been intense negotiations between the relevant parties and courts around the world have found in Nokia’s favor, the company will prioritize protecting the value of its patent portfolio versus achieving certain timelines for resolution,” Nokia said in a statement on Dec. 30.

In the first three quarters of 2023, licensing income accounted for more than half of Nokia’s operating profit as its network infrastructure and mobile networks sales declined.

Oppo and Vivo are owned by Chinese BBK Electronics, while Huawei sold Honor to a consortium of more than 30 agents and dealers in November 2020. BBK Electronics was not immediately available for comment.

Honor was first in terms of handset shipments in the world’s largest smartphone market China in the third quarter with 11.8 million units sold, research firm Canalys said.

(Reporting by Anne Kauranen in Helsinki, Editing by Alexandra Hudson)