Nokia signs multiyear patent deal with Huawei

Chinese technology group Huawei has become the latest company to sign a patent agreement with Nokia, boosting the Finnish group in the face of doubts about its core telecoms equipment business. 

Nokia on Thursday said it had signed a multiyear patent agreement with Huawei but did not disclose any financial details.

The Finnish group has built up a valuable patent portfolio during three decades as a leader in the mobile phone industry. Its patents include technology that strengthens mobile signals within the phone, preserves battery life, and voice recognition.

“Huawei is one of China’s largest companies and is among the world’s leading smartphone manufacturers and we are delighted to welcome them to our family of patent licensees,” said Maria Varsellona, chief legal officer of Nokia. 

The advent of complex smartphones has increased the value of patents. That has led to a flurry of lawsuits involving the likes of Apple and Samsung. Huawei itself sued US telecoms operator T-Mobile in Texas last year. Nokia then countersued Huawei in defence of its customer. 

Nokia said it expected that litigation to end now.

Nokia’s hand in disputes has been strengthened by its purchase last year of Alcatel-Lucent, which brought with it the patent-rich Bell Labs. But smartphone manufacturers have often disputed what a fair and reasonable price is for the use of patents.

In May, Nokia and Apple settled a patent dispute after the iPhone maker agreed to make an upfront cash payment to the Finnish company and sign a new licensing pact. Analysts estimated the deal could be worth about €500m to Nokia. Apple had previously accused Nokia of “using the tactics of a patent troll”. 

Nokia said it expected to start booking payments from the Huawei deal in the current quarter and that there would be “an element of non-recurring catch-up revenue”. It added that the agreement involved some cross-licensing of patents from Huawei as well.

Shares in Nokia rose 3 per cent to €3.98 on Thursday morning but are still down a third from their peak this year. 

Investors have taken fright at the weak outlook for makers of network equipment with Nokia warning in October that the sector would see declines in sales both this year and next.

Telecom equipment manufacturers are waiting until the arrival of new 5G networks towards the start of the next decade for a boost in business with operators currently cutting spending.

Nokia was viewed by investors as being in better shape than Ericsson, its Swedish rival, which has issued multiple profit warnings, but its shares have been hit by a persistent fall in revenues.