Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s recent win against HTC Corp (TPE:2498) and other major lawsuits indicates the Finnish firm’s non standard essential patent portfolio, which is not widely licensed yet, holds significant potential, says a report from J.P. Morgan (Sandeep Deshpande, Rod Hall, Chetan Udeshi and Vipul Hirani).Nokia

Analysts believe “a settlement with HTC is one of key milestones to enable Nokia [to] realize value of its patent portfolio, in our view.”

HTC under pressure

A UK judge ruled that HTC Corp (TPE:2498) infringed a Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) nonstandard essential hardware patent incorporated in chips from Qualcomm and Broadcom, and has ordered an injunction banning HTC from selling certain Android smartphones.

However, the judge gave some time to HTC Corp (TPE:2498) to appeal by delaying the injunction until 4 p.m. on December 6th. The HTC One Mini comes under the ambit of jurisdiction and can be banned from sales in the UK. If HTC fails even after the appeal, then injunction will come into effect on December 6th.

According to analysts, there is a lot of pressure on HTC to settle with Nokia by signing up for a license to nonstandard essential patents. This is not the only lawsuit filed by Nokia against HTC as the Finnish company has sued HTC in many countries. So far, the lawsuits are going in favor of Nokia.

In September, ITC ruled in favor of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) on two non SEPs. Earlier in March, Nokia won two rulings against HTC on a power saving patent. Nokia has filed cases against HTC over 50 non-SEPs in various courts. The current ruling will put more pressure on HTC to agree to settlements with Nokia, according to analysts. HTC is already a licensee of Nokia’s standard essential patent portfolio.

SEP portfolio contains big potential for Nokia

The current ruling has many positive implications for Nokia from a number of aspects. The patent in question, which has been the subject of other lawsuits in the US as well as Germany, is incorporated into certain Qualcomm & Broadcom chips used in HTC Corp (TPE:2498) smartphones. Nokia and Qualcomm entered into an agreement in 2008, but according to the Finnish firm, Qualcomm’s customers do not have a license to use such patent. In such case, Nokia will file lawsuits against the companies, who are using Qualcomm chips that incorporate Nokia IP, and do not have a license agreement for Nokia’s non-essential SEPs.

This, according to analysts “present a significant licensing opportunity with >700m chips shipped by Qualcomm inLTM.”

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has acquired over 40 licensees under FRAND for its SEP portfolio. SEP licensing is subjected to grow based on the unwinding cross licensing and further renewals.  According to the analysts, Nokia’s SEP licensing base to non SEP is capable of generating significantly more royalty income.