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Both Nokia and RIM have recently indicated that as they look to improve on disappointing financial performances, they will be doing more to make their IP assets sweat.
Speaking last week after the announcement that the company had turned in a $1.2 billion quarterly loss, CFO Timo Ihamuotila stated that Nokia is now looking to put greater emphasis on patent licensing and is even contemplating some sales. Then on Friday Reuters reported that RIM had appointed law firm Milbank Tweed Hadley & McCloy to advise on a restructuring plan that could “include selling assets, seeking joint ventures or licensing patents”.
Nokia already has a very sophisticated IP monetisation programme which generates around €500 million a year. In the last few months, it has been involved in several high-profile transactions, including the transfers of 2,000 patents to MOSAID last September and of 450 more to Italian NPE Sisvel in January – indicating that even before last week’s words from the CFO the company was getting more IP-focused. As discussed on here at the beginning of March, Nokia has every reason to do this: it owns a very strong portfolio of patents which read on many key technologies. It may have taken the board some time to fully appreciate the fact, but now that it has the company is well-placed to add quite a bit to its annual IP income.
For a while now, IP has looked to be a potential route to salvation for RIM. The beleaguered Canadian business may have made a series of major managerial and operational errors, but its IP position has strengthened significantly since the dog days of the NTP litigation. In January we suggested that IP may be a saving grace for RIM, while in the same month a study of the company’s patent portfolio undertaken by Envision IP concluded: “Given the vast number of patents it owns, RIM is not likely commercializing or monetizing a number of its technologies; technologies which could bring in much needed revenue to the company. Selling its patent portfolio may be difficult due to lack of demand from buyers. However, licensing may be an avenue that could provide RIM recurring revenues for the remaining shelf lives of its patents.”
Envision has now reported that RIM has just taken ownership of patents that were probably acquired by the Rockstar Consortium as a result of the Nortel auction: “Of these 153 patents acquired from Nortel, 41 appear to be relevant to 3GPP LTE and its underlying and predecessor technologies, such as UMTS, GSM, EDGE, and CDMA. According to our analysis, this gives RIM a total of 269 patents that may be relevant to technologies fundamental to 3GPP LTE.” If Envision is correct, the licensing possibilities are even greater than they were.
Of course, it is one thing to decide you are going to monetise your IP and quite a different thing then to go out and do it. Having stuff people want is part of the equation, of course, but having the expertise to do the deals is also absolutely fundamental. There is no doubt that Nokia has this. Its IP team is relatively large and is certainly very well regarded. It will understand the options out there and has long experience of doing transactions as both a licensor and a seller.
But RIM may be less readily well-equipped for a full-scale monetisation effort. Although it licenses-in IP from a number of other operating companies, as well as NPEs, it does not seem to have much of a record as a licensor. This could put the company at something of a disadvantage and may make giving much of the heavy lifting to a third-party which knows the markets backwards an attractive option. There are, of course, many organisations that specialise in this kind of activity. We know them as NPEs and operating companies use them all the time. Perhaps finding the right one to work with RIM is part of Milbank Tweed’s brief.
IP management, Licensing, Patents, IP business