Nokia Signs Patent License Pact With Samsung for Innovations in Video Standards

Nokia has struck a deal with Samsung to licence patents covering its innovations in video standards, the Finnish telecom company said on Thursday.

While the companies did not disclose the financial terms of the agreement, Samsung will make royalty payments to Nokia.

Nokia's patent portfolio is composed of around 20,000 patent families, including over 3,500 declared essential to 5G.

The deal comes months after rival Ericsson filed a lawsuit in the United States against Samsung in a dispute over royalty payments and patent licenses.

The US International Trade Commission said last month it would open an investigation after Ericsson claimed Samsung had infringed on some of its patents in 4G and next generation 5G wireless cellular communications infrastructure systems.

Samsung was accused of "violating contractual commitments to negotiate in good faith and to license patents on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions."

Many common technological standards, such as Wi-Fi and Bluetooth, are protected by patents held by specific companies. In order for other manufacturers to use such essential technology the holders of such patents are obliged to grant licences on fair, reasonable and non-discriminatory terms – so-called FRAND terms.

In practice however negotiations over these licences sometimes leads to conflicts between technology companies.

Shares in Swedish telecoms manufacturer Ericsson tumbled after it announced it was suing South Korea's Samsung, warning the dispute could see sales take a hit of over half a billion dollars in 2021.

In the first hour of trading on the Stockholm stock exchange, Ericsson's share price was down around seven percent.

The financial impact of the litigation, coupled with delays to renewals of license agreements and market conditions, could negatively impact Ericsson's operating income by between one and SEK 1.5 billion (roughly Rs. 1,300 crore) every quarter starting in the first quarter of 2021, the company said.

© Thomson Reuters 2021

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