Friday 1 February 2008

Nokia sued by German Patent Holding Company IPCom

Whilst much of Germany was following the debate surrounding the closure of Nokia's Bochum factory and whether subsidies paid by the local state government had been misused, IPCom a patent holding company in Munich was preparing another attack on the handset mega-company.

A company called IPCom purchased at the end of 2006 a number of patents from Robert Bosch GmbH relating to the GSM standard. Bosch had invested in the late 1980s and early 1990s extensively in the development of the mobile telephone standard. Bosch's efforts to commercialise their investment were unsuccessful and they withdrew from the telecommunications market after a few years.

According to an interview in Munich's serious daily newspaper, the Süddeutsche Zeitung Bosch had previously tried to negotiate a licensing deal with Nokia - without success. Under the GSM standard rules set by the European Telecommunications Standard Institute (ETSI), Bosch was obliged to offer so-called "essential patents" at Fair, Reasonable And Non-discriminatory ("FRAND") terms. Nokia apparently offered a licence fee of less than 1%.

Christoph Schoeller, the Managing Director of IPCom, states in the interview that IPCom considers the FRAND approach to be a licence fee of 5%. Based on the patented products, he states that he is looking for a return of €12 Million for the twenty year lifetime of the patents.

Not surprisingly there is no mention of the price paid to Bosch for the patents. Given that Bosch had barely exploited the patents (and that their telecommunications activities were for many years making huge losses), the sale of the patent rights was probably an unexpected income bonus. No doubt Nokia will not be the only company expected to pay IPCom a royalty for the use of the patents.

IPCom does not appear to have a website itself. It is part of the Schoeller Group based in Pullach, Germany. The German business daily Handelsblatt reports that 50% is held by a New York-based private equity fund Fortress Investments.

It is not clear which patents are currently involved. The German PTO's website records three utility models, 52 German national patents or applications and nine European patent or applications. Several of the applications are clearly divisional applications - presumably as IPCom tailors its claim language to other alleged infringers

Update 7 Feb 2008

Joff Wild of Intellectual Asset Management Magazine was kind enough to point out that the sum involved was EUR 12 Millarden (EUR 12 US Billion) and not the paltry sum of 12 Million.

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