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Local vendor’s fear of Nokia patents make China delay approval of Nokia-MS deal.

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A report from China suggests that China is exercising unprecedented caution in approving MS-Nokia deal. Usually such acquisitions are approved after a 30-day one-phase investigation in China, but in case of MS-Nokia, it has entered into second phase of investigation.

Such acquisitions usually get approval from China’s Ministry of Commerce after a 30-day first-phase investigation.

But currently, the deal has not been approved yet and is undergoing a second-phase anti-trust investigation, though regulators from some other countries and regions including the US have given the nod already, the report said, citing unnamed sources familiar with the matter.

Sources of Beijing-based newspaper, The Economic Observer have attributed this delay to apprehensions of many local vendors like ZTE, Lenovo and Xiaomi who fear that after this deal gets approved, they need to shell higher royalty to Nokia.

Nokia has already dropped hints during its Q3 earnings call that they will be more aggressive in protecting their IPR and would like to monetize 90% of their patent portfolio which has not been licensed yet.

In case of China the report says Nokia has entered in licensing agreements with only few of the local vendors and can now go for tapping all of them and even charge higher patent fees.

In the past, Nokia adopted a loose system for patent protection in China and only charged a few of the country’s phone makers patent fees, but now it is likely to sign official patent licensing contracts with all domestic users or even charge them higher, according to The Economic Observer.

Currently, the company’s patent fees are generally 2 percent of a device’s selling price, said the report.

Interestingly, The Economic Observer has predicted that in 2014 Nokia could gain $1.1 billion in patent income from the Chinese mobile phone market, which may generate $55.5 billion in sales volumes next year.

Thanks Tom for the Tip. Cheers!!

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Nayan has more than 10 years of experience of covering Technology and innovations. He is a big Nokia fan and Tech disruptions aficionado. He loves to review new cool gadgets and writing about Android, iOS, Gadgets and general Technology stuff. He has been associated with other well-known Tech sites WinCentral and GadgetOx since long. He currently sports a Lumia 950 XL and Nexus 5X. Other interests include listening to Nu-Metal Hits and Kick-Boxing. Write to him at Email: [email protected]
  • sidiji

    As Nokia is the divesting firm; and the Chinese review is supposed to be an anti-trust anti-monopoly review, it would be highly unusual to place any burden on Nokia. The Chinese may attempt to impose more burden on Msft as the enlarging entity…but with windows phone at 3% of the Chinese market, Msft is far from having a dominant market share pursuant to even Mofcom’s own definition of what constitutes ‘dominant’ market share.

    China’s Mofcom’s mandate does not extend to patents. Not all monopolies are illegal, patents and IP being case in point..they are legal monopolies granted for a limited duration to encourage innovation, something the Chinese has recently said they wish to encourage thru stronger IP enforcement. China has its own patent office and IP courts with appropriate jurisdiction that are better equipped to deal with any future patent issues that may arise. Here the issue is moot as Nokia has largely supported FRAND pricing for its standard essential patents and it has been widely acknowledged to be one of the weaker IP enforcers to date.

    Moreover, you cannot preemptively limit a company’s property rights for something they have not yet in fact done. If mofcom does in fact impose patent limitations on Nokia, then the WTO, US and EU needs to seriously examine any such decision for restraint of trade and protectionism by the Chinese in the guise of anti-trust regulation; and take appropriate retaliatory trade sanctions. 15 Countries have already approved this deal without restrictions…for the simple reason that there are NO anti-trust issues existent. It is the height of hypocrisy to use regulatory approval as disguise for domestic trade protectionism, especially in this case where a company is divesting and in fact exiting altogether from an industry.

  • Eat that 😀