As Microsoft prepares to wrap up its acquisition of Nokia's handset business, Google and Samsung are making a last-minute appeal to Chinese authorities about possible IPR implications.
The two Android allies have written to the Chinese Ministry of Commerce to express their concerns surrounding the $7.5 billion deal, which includes a lengthy patent licence. Chinese manufacturers Huawei and ZTE have also complained about the deal to the regulator, which is currently investigating whether Qualcomm is abusing a dominant market position.
Google and Samsung are worried that Microsoft will gain too much control of the handset patents base once it has full access to Nokia's extensive portfolio. Nokia still owns the patents that concern them, as Microsoft only negotiated a 10-year deal for most of the Finnish firm's relevant IPR. But the ever-closer ties between the companies lead the Android players to fear that they will end up paying an inflated price for patents, leading to lengthy and costly litigation between the two sides.
Similar concerns have been raised with the EU though the European regulator approved the acquisition of the devices and services business by Microsoft and the licensing of select patents for around $2 billion. However, EU competition commissioner Joaquin Alumnia was outspoken in voicing his own concerns about possible abuses. The EU said that it would monitor Nokia's behavior in the wake of the deal, to ensure it was not abusing its position in the licensing market, but the body has yet to release an official opinion on the matter.
Mobile IPR is divided between standards-essential patents that must be licensed on Frand (fair reasonable and non-discriminatory) terms, and those patents that are deemed non-essential to standards, which can be licensed on the terms of the owner. Nokia owns about a quarter of all the essential patents in 2G, 3G and 4G, which must therefore be licensed to everyone at the same price.
But it also holds a wealth of other patents (upwards of 30,000) which are not essential, but are widely licensed. Buyers are concerned that these will be licensed unfairly as the Finnish firm pledges to pursue its IPR more aggressively in order to generate new revenues – and that Microsoft will get a better deal.