Nokia Corporation (ADR) (NOK): Value Of Patents Validated In HTC Deal

Nokia Corporation (ADR) (NOK): Value Of Patents Validated In HTC Deal
<a href="">Hermann</a> / Pixabay

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has been pursuing HTC Corp (TPE:2498) in courts all over the world, and late last week, the two companies announced that they had finally made a deal to settle. JPMorgan Cazenove analyst Sandeep Deshpande and the rest of the team say that deal confirms their view that Nokia’s non-essential patents do have meaningful value.

What the settlement means for Nokia

Under the terms of the settlement, which covers more than 60 lawsuits in several countries, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) receives payments from HTC Corp (TPE:2498). HTC then receives a license to use those patents upon which it was accused of infringing. The two companies did not disclose whether HTC will pay a flat fee or a percentage royalty.

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The companies also said they were entering into a collaboration on technology and patents. Once again, the companies did not disclose the details on this collaboration, but Deshpande said they know that it deals with HTC Corp (TPE:2498)’s LTE patents. They suggest that perhaps instead of paying some money up front, HTC has handed over those patents, allowing Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) to monetize them.

HTC deal expected to be template for Nokia patent deals

The analysts believe that Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)  may use the deal with HTC Corp (TPE:2498) as a template for future licensing deals with other companies. This is because Nokia has beaten HTC in several cases in numerous countries, even receiving injunctions against HTC in some cases. By using those cases as a template for future deals, Nokia may be able to avoid a lengthy and expensive litigation process.

What’s next for Nokia?

The next two things Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will have to deal with are the result from the arbitration with Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), which is expected next year, and a potential renegotiation of contracts with Apple Inc. (NASDAQ:AAPL), which is expected in 2016.

Since Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) control more than half of the smartphone market share, the agreements with both companies are especially important.

The JPMorgan team maintained its Overweight rating and €8 per share price target. Shares of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) declined nearly 3% at the New York Stock Exchange in midday trading today.

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