Nokia Fights Patent Battle - Analyst Blog
May 03 2012 - 1:32PM
Zacks
Nokia Corporation (NOK) has entered into a
legal battle claiming that its patents have been violated by rivals
Research in Motion Ltd (RIMM), HTC and Viewsonic
Corp. The case has been filed in U.S. and Germany against
infringements of Nokia’s dual function antennas, power management
for mobile devices and various software related
patents.
Presently, Nokia is in dire straits, losing on every front.
Nokia remains severely challenged owing to stiff competition,
primarily from Apple Inc’s. (AAPL) iPhone, and an
array of other smartphone manufacturers using Google
Inc’s. (GOOG) Android platform. In this situation if the
company fails to protect its patent portfolio, the outcome can be
worse.
The company has the strongest patent portfolio in the wireless
industry and has spent almost $62 billion in the last two decades
in research and development. Nokia possesses a very strong
portfolio of around 10,000 patents.
Furthermore, the company has patent licensing agreements with
around 41 mobile handset manufacturers who can use its patents. The
company earns a healthy royalty income from this licensing
agreement. Recently, the company has lost its title as the world’s
biggest mobile manufacturer to Samsung Electronics. We believe that
Nokia will fight till the end to protect its patent.
For quite some time now Nokia has been defending its patents
against other handset manufacturers. Last year, the company filed a
lawsuit against iPhone manufacturer Apple Inc. for some of its
patents which were settled after Apple agreed to pay a one-time
payment and royalty fees.
In this current round of litigation, Nokia has sued HTC for
unauthorized use of its proprietary innovations which are not
widely licensed. They have also accused California-based tablet
maker Viewsonic corp. of infringing four patents relating to 3G and
Wi-Fi technology industry standards. According to Nokia, they just
want to stop the illegal use of their proprietary technologies in
any form.
Therefore, we retain our long-term Underperform recommendation
on Nokia. Currently, Nokia has a Zacks #5 Rank, implying a
short-term Strong Sell rating.
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