Nokia reaffirms licensing commitments for standard essential patents
April 8, 2014
Over the last two decades, Nokia has developed a large number of fundamental technologies and made significant contributions to the development of wireless communication standards. This research and development investment has resulted in a significant portfolio of standard essential patents (SEPs), which Nokia has agreed to license on fair, reasonable and non-discriminatory (FRAND) terms, in line with the intellectual property rights policies of the relevant standard setting organizations.
To date, in line with those undertakings, we have successfully agreed licenses with more than 60 companies, enabling them to benefit from our innovations to build products that work to the standards, fostering increased competition and more choice for consumers. From time to time, Nokia has shared information on the Nokia licensing program with competition or antitrust authorities in connection with specific cases or investigations. No authority has ever requested Nokia to change the way Nokia licenses its SEPs.
After the pending acquisition announced on September 3, 2013 of substantially all of Nokia’s Devices & Services business by Microsoft is closed, Nokia will retain its world-leading patent portfolio and Nokia’s previous FRAND undertakings remain in force. In addition to other customary closing conditions, the transaction with Microsoft is subject to regulatory approvals, a process which has involved thorough review of Nokia’s licensing practices by several competition authorities around the world. During that process, no authority has challenged Nokia’s compliance with its FRAND undertakings or requested that Nokia make changes to its licensing program or royalty terms.
In connection with this transaction with Microsoft, some of our competitors have suggested to regulators that after the transaction Nokia could try to abuse its position as a strong SEP holder. As we have no intention to do so and plan to continue to honor our FRAND undertakings in the future, we are prepared to voluntarily reaffirm Nokia’s continuing commitment to FRAND licensing principles.
Our statement below provides clarity on how Nokia will continue to license its SEPs. It does not reflect or introduce any changes to Nokia’s existing licensing program, royalty terms or practices. The statement has been provided to the Ministry of Commerce of the People’s Republic of China, in order to facilitate the approval process for Microsoft’s acquisition of substantially all of Nokia’s Devices & Services business. It applies equally to prospective licensees irrespective of their domicile.
- Nokia confirms its continued commitment to honor its undertakings to standard-setting organizations (SSOs) to license its standard-essential patents (SEPs) on (fair), reasonable and non-discriminatory (FRAND) terms pursuant to IPR policies of such SSOs. This commitment prevents Nokia from imposing licensing terms for its SEPs that would be inconsistent with such FRAND undertakings.
- Nokia confirms its support for a principle that, subject to reciprocity, injunctions with SEPs should not be enforced to prevent the implementation of a standard subject to FRAND undertakings, unless a patent holder has made a FRAND license available and the prospective licensee has been unwilling to enter into such FRAND license or to comply with its terms.
- Subject to reciprocity and the evolution of SSO IPR policies and judicial interpretations thereof, Nokia acknowledges that the willingness of a party without undue delay to submit the resolution of a possible dispute whether license terms offered by Nokia are inconsistent with Nokia's FRAND undertakings to an independent adjudicator that is reasonably acceptable to both parties, to be bound by such adjudication, to enter into FRAND license resulting from such adjudication, and to pay any potential award and FRAND royalties resulting from such adjudication and agreement, can be a relevant factor for an enforcing body to determine whether a party is a willing licensor or licensee.
- Subject to reciprocity and Nokia’s FRAND undertakings to respective SSOs, Nokia makes its SEPs covered under such undertakings available for licensing pursuant to the IPR policies of such SSOs without subjecting the availability of such licenses to the licensees also taking licenses to Nokia’s patents not covered by such undertakings.
- Whenever Nokia transfers SEPs to a new owner in the future, Nokia will pass on the FRAND undertakings with respect to such SEPs to such new owner by only assigning such SEPs subject to the existing FRAND undertakings given by Nokia to SSOs (including what is reconfirmed herein).
- Nokia’s current practice of valuing each FRAND license in its full context takes into account, without limitation, the patents or portfolios licensed, the term, the products licensed, the business model for selling or distributing such products, the standards covered, the extent of market adoption of the standardized functionalities, the agreement structure, the value of any grant back license or any other non-monetary compensation, payment arrangements, and the field of use that are intended to be covered in each situation, as applicable. Following the closing of Microsoft transaction and subject to reciprocity, Nokia will not depart from its currently generally offered FRAND per unit running royalty rates for Nokia’s current portfolios of cellular communication SEPs, as and to the extent applicable, except where merited by differences in the above factors.
- Only for the avoidance of doubt and without intention to allow circumvention of the commitments made herein, nothing in these commitments is intended to (a) have any impact on Nokia’s rights or obligations beyond the extent to which Nokia’s SEPs are covered by its existing FRAND undertakings, (b) limit Nokia’s legitimate right to license or divest any of its patents, (c) amend or cause amendment of any contract between Nokia and any third party, or (d) create any obligation for Nokia to take licenses to technologies that Nokia does not use.
- Notwithstanding the foregoing, the commitment in paragraph 6 does not apply with respect to any company that asserts any patents against Nokia’s manufacture, sale or offering of mobile communication products or services.
It should be noted that Nokia and its business are exposed to various risks and uncertainties and certain statements herein that are not historical facts are forward-looking statements, including, without limitation, those regarding: A) the planned sale by Nokia of substantially all of Nokia's Devices & Services business, including Smart Devices and Mobile Phones (referred to below as "Sale of the D&S Business") pursuant to the Stock and Asset Purchase Agreement, dated as of September 2, 2013, between Nokia and Microsoft International Holdings B.V.(referred to below as the "Agreement"); B) the closing of the Sale of the D&S Business; C) receiving timely, if at all, necessary regulatory approvals for the Sale of the D&S Business; D) expectations, plans or benefits related to or caused by the Sale of the D&S Business; E) expectations, plans or benefits related to Nokia's strategies, including plans for Nokia with respect to its continuing businesses that will not be divested in connection with the Sale of the D&S Business; F) expectations, plans or benefits related to changes in leadership and operational structure; G) expectations and targets regarding our operational priorities, financial performance or position, results of operations and use of proceeds from the Sale of the D&S Business; and H) statements preceded by "believe," "expect," "anticipate," "foresee," "sees," "target," "estimate," "designed," "aim", "plans," "intends," "focus," "will" or similar expressions. These statements are based on management's best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors, including risks and uncertainties that could cause these differences include, but are not limited to: 1) the inability to close the Sale of the D&S Business in a timely manner, or at all, for instance due to the inability or delays in obtaining necessary regulatory approvals for the Sale of the D&S Business, or the occurrence of any event, change or other circumstance that could give rise to the termination of the Agreement; 2) the potential adverse effect on the sales of our mobile devices, business relationships, operating results and business generally resulting from the announcement of the Sale of the D&S Business or from the terms that we have agreed for the Sale of the D&S Business; 3) any negative effect from the implementation of the Sale of the D&S Business, as we may forego other competitive alternatives for strategies or partnerships that would benefit our Devices & Services business and if the Sale of the D&S Business is not closed, we may have limited options to continue the Devices & Services business or enter into another transaction on terms favorable to us, or at all; 4) our ability to effectively and smoothly implement planned changes to our leadership and operational structure or maintain an efficient interim governance structure and preserve or hire key personnel; 5) any negative effect from the implementation of the Sale of the D&S Business, including our internal reorganization in connection therewith, which will require significant time, attention and resources of our senior management and others within the company potentially diverting their attention from other aspects of our business; 6) disruption and dissatisfaction among employees caused by the plans and implementation of the Sale of the D&S Business reducing focus and productivity in areas of our business; 7) the amount of the costs, fees, expenses and charges related to or triggered by the Sale of the D&S Business; 8) any impairments or charges to carrying values of assets or liabilities related to or triggered by the Sale of the D&S Business; 9) potential adverse effects on our business, properties or operations caused by us implementing the Sale of the D&S Business; 10) the initiation or outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against us relating to the Sale of the D&S Business, as well as the risk factors specified on pages 12-47 of Nokia's annual report on Form 20-F for the year ended December 31, 2012 under Item 3D. "Risk Factors." and risks outlined in our fourth quarter and full year 2013 results report available for instance at www.company.nokia.com/investors. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.