According to Microsoft’s Strategic Rationale document,
Microsoft is acquiring “Nokia’s Qualcomm and other key IP licenses”; “licens[ing]
Nokia’s patents for use across all of Microsoft’s products”; and “licens[ing the] ability
to use Nokia’s HERE broadly in its products.”
The document notes that “Nokia retains NSN, HERE, its CTO Office and its
patent portfolio.” The document also
states:
IP Acquisition and License Agreements with Nokia
Intellectual
property is an important element of the smart devices business
Unless
managed proactively patent issues can create uncertainty for smartphone
shipments
Unless
managed creatively, patent royalties can add over 10 percent to the costs of a
smartphone Bill of Materials
Microsoft
is acquiring over 8,500 design patents, ownership of the Lumia & Asha
brands, and a ten-year license to use the Nokia brand on feature phones.
Microsoft
is paying 1.65 billion [Euros] for a fully paid-up license to Nokia’s utility
patents
Covers
all of Nokia’s patents and patent applications as of the closing date (except
NSN)
The
total license price includes an option to convert coverage from a ten-year to a
perpetual license
The
agreement provides for a broad, five-year, two-way standstill, including NSN
Nokia’s
patent portfolio is one of the most valuable in the tech sector
Nokia’s
portfolio has approximately 30,000 utility patents and patent applications; we
consider it to be one of the two most valuable portfolios relevant to wireless
connectivity
The
license also provides significant value for Microsoft’s existing businesses,
replacing after 2014 Microsoft’s existing annual license payment to Nokia
Microsoft also secures other Valuable Patent Benefits
Nokia is
assigning to Microsoft benefits under more than 60 patent licenses with third
parties
Nokia
is assigning its existing license with Qualcomm, which is the other company that
ranks with Nokia at the top of having a valuable wireless patent portfolio
Nokia
is also conveying rights under its agreements with IBM, Motorola Mobility and
Motorola Solutions
These
give Microsoft the benefit of attractive royalty arrangements Nokia negotiated
Microsoft
will combine the new Nokia license and these agreements with its existing
patent agreements
Microsoft’s
agreement with Samsung will provide coverage for these additional devices
without added payments
Microsoft will also benefit from
its prior or continuing agreements with Apple, LG, Nortel, Kodak, and others at
no additional cost
Put
all together, Microsoft will have the most cost-effective patent arrangements
for smart devices
Another interesting point is that this deal may take
Microsoft out of contention for the BlackBerry patent portfolio. And, at least one commentator placed the
highest value for the BlackBerry portfolio as a potential target for Microsoft
for around $5 billion. BlackBerry’s stock is up since the Microsoft and Nokia announcement.
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