Microsoft plus Nokia: Pending patent troll?

Nokia's large patent portfolio could be a powerful weapon in Microsoft's war on archrival Google

While the focus of the news of Microsoft's acquisition of Nokia's devices businesses is the future of Microsoft as an Apple clone, there's another story too. What's left at Nokia? Not much -- Microsoft is taking both the traditional mobile phone and smartphone businesses. According to Nokia's press release, there's a mapping data business, a technology business providing phone companies with infrastructure, and a substantial patent portfolio.

While the network equipment business is significant, it's the patent portfolio that raises the most interesting questions. Instead of acquiring the patents related to the device business as might be expected, Microsoft is merely licensing them and leaving Nokia in possession of the actual patents. The license is nonexclusive, and Nokia is free to use them any way it wishes.

That means Nokia is free to treat them as a profit center. Nokia has already shown it is ready to be aggressive with its patent portfolio. For example, it is the holder of the only patents known to read on Google's (otherwise unencumbered) VP8 codec family, and Nokia has said it has no intention of licensing to Google, with the implication it will instead block the standard from progressing. That aggression can only be magnified by the new freedom Nokia has to leverage the rest of its portfolio.

By divesting its devices business yet retaining ownership of the patents that relate to them, Nokia has immunized itself from retaliatory action when it makes future patent offensives. In the past, a company such as Google -- most likely Nokia's primary target -- could retaliate by attacking Nokia's infringement of its own patents, but that line of defense is no longer available since all the products now belong to Microsoft. That's the background to Nokia's statement that it "plans to continue to build Nokia's patent portfolio [and] to expand its industry-leading technology licensing program."

This is not just about the VP8 patents. Nokia can now afford to analyze everyone's business -- especially Apple, Samsung, and Google -- and identify "infringements" that can be profitably leveraged. With extensive investment in mobile technology over many years, the potential for Nokia to burden Microsoft's competitors with expensive litigation and obstructive injunctions on many subjects is huge.

With this transaction, Microsoft is not only trying to copy Apple's iPhone business model with integrated software and hardware. It's also created a fearsome patent-licensing entity that will ruthlessly seek fees from any part of the mobile industry that competes with Microsoft. That entity has access to €1.5 billion of Microsoft funding, so it can indulge in big-budget litigation even before it's successfully collected on any patents.

In other words, Nokia has abundant opportunity to jump into the patent troll business, with Microsoft's competitors in the cross-wires.

This article, "Microsoft plus Nokia: Pending patent troll?," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest business technology news, follow on Twitter.

Copyright © 2013 IDG Communications, Inc.

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