Nokia, the Finnish telecom equipment giant, announced on Thursday the finalization of a significant 5G patent agreement with Honor, a leading Chinese smartphone manufacturer. However, amidst this agreement, Nokia continues to navigate legal battles with other prominent Chinese companies over patent disputes, Reuters news report said.
Once dominating the mobile phone industry globally, Nokia now possesses a substantial patent portfolio integral to key technologies in phone manufacturing. Notably, licensing revenue from these patents accounted for 39 percent of Nokia’s operating profit in 2022.
The company has been entangled in legal disputes with Chinese device makers Oppo and Vivo across multiple countries since 2021, regarding the use of both 4G and 5G patents. These disputes, as per a source familiar with the matter, remain unresolved.
While Nokia hailed the recent agreement with Honor as “amicable,” it comes on the heels of setbacks in China. A local court in China ruled in favor of Oppo, supporting their plea for reduced royalty rates on Nokia’s technologies, as reported by the South China Morning Post.
Susanna Martikainen, Nokia’s Chief Licensing Officer, expressed satisfaction with the Honor deal, highlighting it as the “fourth major litigation-free smartphone agreement” Nokia has sealed over the past year.
Wenyu Zhou, Head of Global Intellectual Property at Honor, emphasized Honor’s commitment to respecting intellectual property rights, deeming the reasonable value of IP crucial for the mobile industry’s development.
Oppo, in response to the Chinese court ruling, stressed its implications, stating it provides “clear guidelines for 5G standard essential patent royalty rates” for industry participants.
Nokia, however, recently disclosed its inability to meet its 2023 financial targets due to the inability to recognize revenue anticipated from ongoing license renewal discussions, expected to extend into 2024. The company reiterated its commitment to safeguarding the value of its patent portfolio over meeting specific resolution timelines.
Throughout the first three quarters of 2023, Nokia’s licensing income accounted for over half of its operating profit, amid declining sales in network infrastructure and mobile networks.
Oppo and Vivo, both subsidiaries of Chinese BBK Electronics, remain entwined in these legal disputes, while Huawei’s sale of Honor to a consortium in November 2020 has shifted its dynamics. At the forefront of handset shipments in China’s smartphone market in Q3, research firm Canalys reported Honor’s sale of 11.8 million units.