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

Both local and international mobile phone makers, have expressed their concerns to Chinese regulators, warning the deal may result in higher patent licensing fees.
Written by Cyrus Lee, Contributor

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.

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.

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