14 DAY TRIAL // Soon, Finnish mobile phone maker Nokia will be part of Microsoft, and the deal raises concerns among manufacturers in Korea, as detailed in a petition submitted to the Fair Trade Commission (FTC) on March 7.
The Korea Electronics Association (KEA) has submitted said petition to FTC so as to complain that the acquisition of Nokia by Microsoft could actually turn the former into a patent troll.
The idea is very simple. Nokia, once one of the largest makers of mobile devices out there, could start increasing royalties for its patents after the transaction with Microsoft is completed, which would affect manufacturers in Korea, as well as those in other countries around the world.
For those out of the loop, we should note that Nokia holds a great deal of patents essential to mobile devices, including many that are related to wireless connectivity, and which have already been cited in patent lawsuits against Apple and Samsung, for example.
As part of the acquisition agreement, Nokia will continue to own and use its patents for 10 more years, despite the fact that it will no longer be a mobile phone maker, and this is exactly why companies in South Korea are concerned.
At the moment, Nokia is not exercising its patent rights, mainly due to various cross-licensing deals signed with Samsung and other mobile phone makers out there.
However, as soon as the Microsoft acquisition is completed, things will change, and the company will be able to “launch patent lawsuits or demand an increase in royalties without any limitation,” KEA lawyer Hwang Eun-jeong said, according to businesskorea.co.kr.
What’s more, Microsoft could also benefit from this, by “keeping Samsung and Apple at bay by utilizing Nokia as a sort of cannon fodder,” while expanding its own smartphone business, Hwang Eun-jeong also said.
The deal between Microsoft and Nokia has already received the necessary regulatory approvals in the United States and Europe, but still needs to see a green light in other markets around the world.
In fact, things appear to be moving quite slow in this direction in China, where similar concerns were voiced not long ago, and it appears that they will face delays in Korea as well, where FTC is currently investigating the transaction.
“The FTC needs to look deeply into the possible impact from the acquisition. We also suggested an approval on condition of Microsoft’s acquisition of not only the business unit but also its patents,” the KEA said.
Nokia and Microsoft have yet to comment on the matter, and it remains to be seen whether they will agree to officially commit not to abuse of the aforementioned patents once the purchase deal goes through.