EARLIER this week, mobile phone maker Nokia won a legal case against German intellectual property company IPCom in the High Court in London. The court ruled that Nokia does not have to pay IPCom to use the technology for which it owns patents. IPCom is one of the intellectual property (IP) companies known as “patent trolls” – basically, they buy up patents, then go about finding ways of making money from them. In this case, the company tried to increase the charges that mobile phone-makers had to pay it to use the technology it owned by way of patents.
Following some complicated back and forth between Nokia, IPCom and the European Commission and the German courts, Nokia responded by bringing the case to the British court, claiming that the patents should never have been granted in the first place. Nokia won, and the decision is expected to apply across all jurisdictions.
A famous victory for Nokia, no doubt. But what gives this case a whiff of irony is that Nokia is involved in a similar case in the US, but where it is accusing Apple of infringing its patents. The case there is that Nokia has licensed its technology to all the mobile phone manufacturers except Apple, and it accuses Apple of using its patented technology without paying.
This is far from being a coincidence. The whole area of patents, especially around mobile telephony, is big right now. “It’s a symptom of the recession, and the battle for market share,” says Paul Harris, an IP specialist at law firm Speechley Bircham. “During the downturn, Nokia’s market share has fallen, so they are trying to rely on IP rights to be compensated for the market share that Apple has taken [since the launch of the iPhone.]”
Mobile telephony, he says, is an area that is particularly fertile for these cases, because it is so complex. “There are all sorts of companies involved – chip-makers, computer-makers, camera-makers. People will defend their patch,” points out Harris.
Michael Burdon, head of IP at law firm Olswang, agrees. “The case of mobile telephony is particularly complicated, as there is interplay between manufacturers, distributors and the IP-holding companies,” he explains. He goes on to say that at its heart, the Nokia/IPCom case was an old-fashioned patent case.
But a new strand of litigation has been added to the mobile telephone sector, which revolves around patents being essential to mobile telephony standards. The mobile companies together decide on standardised technology for the industry, to ensure that phones can work in unison. Patents that are central to standards are, of course, particularly profitable.
Even beyond the world of mobile phones, patents are becoming more important. Burdon points out that companies are building “patent portfolios”, in some cases to defend themselves against patent infringement law suits. There are cases when one company will threaten to sue another over infringement of a patent, but the other firm responds by pointing out that it owns patents too, and that it could counter-sue for infringement of those.
IP is no longer a peripheral thing, but a central part of a firm’s assets. When venture capitalists and banks look at a company, perhaps with an eye on potential M&A, they increasingly see its IP as an important part of its value. Paul Harris says that companies whose patents are a large part of their business will be looking nervously at what has happened to the prices of large pharmaceutical firms recently. A number of large patents care coming to an end, which is causing some firms’ share prices to fall. The Nokia case can only force home the message that IP is important, and becoming more so.