Nokia Widens Patent Licensing Agreement with Samsung

Amid a surge in the unceasing IT patent wars, Nokia (NOK) has struck a harmonious chord, extending its patent agreement with mobile kingpin Samsung for another five years. The prior arrangement was slated to run out at the end of this year.

For Nokia, in the wake of selling off its mobile phone business to Microsoft (MSFT) for $7 billion in early September, the patent deal with Samsung supplies evidence that it intends to rely on licensing income—along with its network equipment business—to reinvent itself and carve out sustainable revenue and profit sources. What’s notable about this particular agreement is who it’s with, considering Samsung’s position and heft in the smartphone industry.

According to the agreement, Samsung will pay additional compensation to Nokia starting Jan. 1, 2014, but the amount won’t be settled until the conclusion of a binding arbitration in 2015, Nokia said.

“This extension and agreement to arbitrate represent a hallmark of constructive resolution of licensing disputes, and are expected to save significant transaction costs for both parties,” said Paul Melin, Nokia chief intellectual property officer.

Nokia lays claim to a licensing portfolio that includes some 50 customers yielding about $675 million in annual revenue.

Playing Nice vs. Not-So-Nice

Nokia’s licensing deal with Samsung comes only a few days after a show of the darker side of intellectual property. Late last week, a group of mobile IT heavyweights—Apple (AAPL), BlackBerry (BBRY), Ericsson (ERIC), Microsoft (MSFT) and Sony (SNE)—operating as a consortium calling itself Rockstar and armed with a Nortel patent portfolio it won for an eye-popping $4.5 billion in 2011 by outbidding Google (GOOG), filed an infringement suit in U.S. District Court, Eastern Texas Division, against not only the search giant but also ASUS, HTC, LG, Pantech, Samsung and ZTE, all of which produce Android-based devices.

Rockstar’s suit alleges infringement on seven patents, which mostly surround Google’s sweet spot—its high-revenue search and advertising business. What’s Rockstar want? In all likelihood, either patent licensing agreements with the named companies or a blanket settlement, or both. This isn’t going to get settled anytime soon, so check back in two or three years—there’s sure to be some news on it by then.