Handset makers urge China to set conditions for Microsoft-Nokia deal

Handset makers urge China to set conditions for Microsoft-Nokia deal

Summary: Both local and international mobile phone makers, have expressed their concerns to Chinese regulators, warning the deal may result in higher patent licensing fees.

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China's Ministry of Commerce is now reviewing Microsoft's 5.44 billion euro bid to take over Nokia's phone business. Its antitrust organ recently held a seminar in China to hear the case, which attracted domestic mobile phonemakers and as industry associations to participate, according to a Sina news report on Friday.

The Microsoft-Nokia Deal

ZDNet's coverage of the Microsoft-Nokia deal

On September 2, 2013, Microsoft announced that it was buying out Nokia’s devices business for $7.2 billion. ZDNet has this story covered from virtually every angle and from perspectives across the U.S., Europe, Asia, and Australia.

During the meeting, two common arguments were made by the participants: setting limitations on Nokias licensing rates; and fair, reasonable, and non-discriminatory terms (FRAND), to avoid unreasonable royalties. These industry professionals also demandéd conditions on Microsoft to restrict its Android licensing fees, according to the report.

Chinese enterprises should learn to make use of the rules. If the Intellectual Property Rights is a world-wide recognized game, then Chinese players should take the opportunities to express their own demands, according to one participant to the seminar.

Despite Nokia selling the majority of its handset business to Microsoft, it still will hold onto its portfolio of patents – one of its key money-making tools in the mobile industry.

Chinese mobile makers worry this the new stance would evolve the entity into a so-called "patent troll" in the future. As the patent-holder Nokia will no longer involve in the handset making business, which makes it free from the counterclaims of other phone markers, it is also likely that Nokia will lift its patent licensing fees since it will not get into cross-licensing with other peers.

The report revealed that Microsoft has inked with over 20 Chinese handset makers over its patents on Android, charging US$5-$20 per handset or tablet for the use of the system. It projected that total royalties paid to Microsoft would reach US$3.8 billion by the year of 2017.    

Chinese mobile makers expect Microsoft to "maintain a certain limit on its royalty charges, reasonably conduct patent licensing, and prohibit it from banning the usage of its patent arbitrarily," said the aforementioned seminar participant in the Sina report.

On December 27, 2013, a Bloomberg report, citing an anonymous source, said Chinese mobile phone maker Huawei and ZTE had demanded the Ministry of Commerce to set conditions on the deal to ensure patent licensing fees will not rise afterward.

On March 3, 2014, Bloomberg reported again that Google and Samsung Electronics were siding with Chinese mobile phone makers and expressed concerns to a possible increase in patent licensing fees following the Nokia deal.

Topics: Legal, Android, Microsoft, Nokia, China

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4 comments
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  • Dear Nokia,

    Please don't patent troll and price gouge like Apple did to us. We learned our lesson.

    Sincerely, China.
    Sean Foley
  • Nix the deal

    The situation has changed. The smartest thing Microsoft could do now is cancel the acquisition.
    symbolset
    • Why should they? this is more about Nokia then MS

      Google may be worried about MS owning a handset company, as there is a difference - MS bought a company for 5 billion with rising sales, while Google bought a company for 12 billion with falling sales.

      Google lost money selling it to Lenovo, but kept the patents. I can understand their resentment with MS - having to tell their Android OEM's why they had to pay licensing fees to MS, but attacking the non-MS Nokia holding the patents as a way to stop the sale smacks of desperation on Google's part, IMHO.

      They could easily counter with the patents they hold against Nokia, but the smartest thing MS could do is go forward with the sale since Google seems to fear it, so they may see something we don't.
      William.Farrel
  • Running scared

    So Google and Samsung are running to the Chi-Coms to try to delay/nix the Microsoft acquisition of Nokia? Me thinks they are suddenly concerned that the powerful hardware + software combination of Nokia and Microsoft threatens their near monopoly in mobile phones. Microsoft + Nokia creates the same thing as Apple (a company that controls both the hardware and software of mobile phones) with, what, a quarter the market share? The notion that Google and Samsung could use the Chi-Coms to slow this down is corruption, pure and simple, and should sicken any advocate of freedom.
    FDanconia