Nokia began in 1865 as a single paper mill operation. Since then, the Finnish company has seen sector-by-sector success and the same speaks volumes about its global rise as well. Post Nokia's acquisition of Alcatel- Lucent, its position has emboldened even more.1 Till now, Nokia has done business in about 130 countries and operated as a telecommunications, information technology and consumer electronics company. Whereas, Huawei was founded in 1987 as a Chinese company and operates in domains of Telecom Neworks, IT and cloud services.2 Presently, Huawei is the biggest maker of telecoms equipment by revenue and world's third largest maker of smartphones.
About Patent Licensing
Licensing is a contractual agreement where licensor's patents, service mark and trademark and know how may be sold or made available to licensee for consideration. Recently, both the companies have been in news for the Patent Licensing agreement that took place between the two giants. Previously, Xiaomi too had signed a similar deal with Nokia. Even the simple technology that we use everyday can actually cost the companies a lot in Research and Development. An innovation that is seemingly simple today might not have been the same when it might have been invented for the very first time. Agreements like these are done so that the companies can avoid legal disputes and the original company responsible for the invention gets a slice of the share from anyone who uses it.3
What Flows After The Nokia-Huawei Deal
Nokia now has licensing deals with a lot of handset makers including Apple, LG, Samsung Electronics and Xiaomi. Nokia existed as a huge cellphone maker a decade ago, but eventually it withdrew from the handset market in 2014; however, the company still remains a major licensor for wireless technology. Nokia had created a valuable patent portfolio in the three decades in the mobile industry where it existed as a leader. In its patent portfolio some innovations that exist are the technology that improve mobile signals within the phone, help in preserving battery life and other features like voice recognition.4
Conclusion
After the Finnish company entering into an agreement with the huge Chinese giant, it now has patent licensing agreements with most of the big companies in this sector. Nokia's shares have dipped with time but inspite of that and even after pulling out of the manufacturing sector, the royalty that Nokia receives from being the first innovator, from companies like Xiaomi, helps it to survive effectively. In the present case, the details about the purported deal have not been made public but the amount that Nokia shall receive from Huawei in the form of royalty further strengthens its position for the wide range of innovations that it made in the capacity of a first mover.
Footnotes
[1] https://www.nokia.com/about-us/who-we-are/our-history
[2] https://www.huawei.com/en/about-huawei
[3]https://www.xda-developers.com/huawei-patent-license-agreement-nokia/https://www.xda-developers.com/huawei-patent-license-agreement-nokia/
[4] https://www.ft.com/content/1291d6c0-e62c-11e7-97e2-916d4fbac0da
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