Nokia See Sales Boost from Patent Ruling

Nokia will begin booking additional revenue during the current quarter thanks to a ruling by an arbitration court over payments from LG Electronics, the South Korea electronics giant, for using Nokia’s smartphone patents.

The Finland-based company said it would get a lift as well from a one-off payment though no disclosure was made by Nokia as to what the payment amount was. The two companies began arbitration back in 2015.

The Chief Legal Officer for Nokia Maria Varsellona said that the company believes the award gives confirmation of the quality of the patent portfolio of Nokia, and we continue seeing potential for more licensing opportunities.

This ruling was from the International Chamber of Commerce’s Court of Arbitration.

Nokia recently has signed new deals with large smartphone makers such as Apple and Samsung Electronics and China-based Xiaomi Technology.

The patent unit at Nokia during the first six months of 2017 posted sales of more than €616 million, only 6% of the total revenue for the group.

However, the licensing payments are very profitable while the core business at Nokia, telecom networks, has been suffering through a slump that is industry wide.

Nokia was quicker than most expected to sign new deals for its patent division, with the next company in its sites being Huawei, said one analyst from a European research company.

The analyst added that the revenue received from the LG ruling will be much smaller than that from the agreement reached with Apple, which has been estimated to be as high as €250 million annually.

Shares in the Finnish company were up by 0.6% during early morning European trading.

Nokia at one time dominated the mobile phone business. However, in 2014 it sold its phone business to software maker Microsoft but retained its complete patent catalog that covered the technology that help reduce the need to have certain hardware components inside a phone; conserves the life of the battery; and increases the reception for the radio, amongst other important and invaluable features.

LG has a market share worldwide for smartphones of only 4%. According to online research firm Strategy Analytics.

Just last week Apple announced its new lineup of iPhones and Samsung tried to jump the gun by teasing smartphone users with its foldable mobile handset that has now been promised to be launched in 2018.