Nokia Oyj (NOK1V) said Samsung Electronics Co. (005930), the world’s largest mobile-phone maker, agreed to license its patents for five more years, a boon for the Finnish company as it seeks to rebuild revenue after selling its handset unit.
Samsung agreed to pay Nokia additional compensation starting Jan. 1, according to a statement from Espoo, Finland-based Nokia today. The amount will be settled in a binding arbitration expected to be concluded in 2015. The previous agreement was set to close at the end of this year.
Patents will be one area of focus for Nokia after the former mobile-phone market leader agreed to sell its handset division to Microsoft Corp. (MSFT) in September. Without phones, the company’s largest business will be network equipment, and it is also retaining patents to generate licensing income.
“This deal demonstrates the opportunities for the new Nokia in intellectual property rights,” said Sami Sarkamies, an analyst at Nordea Bank AB in Helsinki. “It’s significant because it relates to Samsung, the client with the biggest potential in such rights. It’s good timing for Nokia and shows they will be able to benefit from the device-unit divestment from the first day.”
Samsung, based in Suwon, South Korea, overtook Nokia as the largest mobile-phone maker last year and has also become the biggest producer of smartphones, the most lucrative and fastest-growing part of the handset market. Malin Roennmark, a Samsung spokeswoman in Stockholm, confirmed the agreement, declining to comment further.
Nokia rose 1.1 percent to close at 5.78 euros in Helsinki. Samsung fell less than 0.1 percent to 1,499,000 won in Seoul today.
Mark Durrant, a Nokia spokesman, declined to comment on the terms of the deal. He said Nokia has average annual revenue of about 500 million euros ($675 million) from agreements with more than 50 licensees.
“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,” Paul Melin, Nokia’s chief intellectual property officer, said in the statement.
To contact the reporter on this story: Adam Ewing in Stockholm at firstname.lastname@example.org