Nokia Initial Win Over HTC to Be Reviewed by Trade Agency

Nokia Oyj (NOK1V)’s preliminary victory in its efforts to collect royalties from Taiwanese phonemaker HTC Corp. (2498) will be reviewed by a U.S. trade agency with the power to keep the smartphones from entering the country.

The U.S. International Trade Commission in Washington will consider parts of a judge’s findings that HTC violated two Nokia patents and not a third, the agency said in a notice dated Dec. 9 and posted on its website today. The six-member commission, which is being asked to block HTC phones that infringe the patents, is scheduled to make a final decision by Jan. 23.

Nokia, once the biggest maker of mobile phones that has since sold its handset business, has filed patent-infringement complaints against HTC throughout the U.S. and Europe. HTC on Dec. 3 was banned from selling its One Mini phone in the U.K. after it was found to infringe a Nokia patent there, though it was given time to appeal.

ITC Judge Thomas Pender in September found HTC violated Nokia’s patent for a way to remove errors in radio signals and another for a process to deal with different radio frequencies. No infringement was found of a third Nokia patent for a way to transmit data from a computer to a mobile phone, which Google Inc. helped Taoyuan, Taiwan-based HTC challenge. It was directed at phones running on Google’s Android operating system.

HTC, which is challenging the infringement finding, argued in a filing with the agency that its products shouldn’t be cut from the U.S. market even if it loses. It said the case is part of an effort by companies like Microsoft Corp. and Apple Inc. to curtail the growth of Android phones in the U.S.

Amaze 4G, Flyer

The case targets HTC phones including the Amaze 4G, One, Rhyme and Vivid, as well as the Flyer and Jetstream tablet computers. Nokia has a second trade case pending against HTC at the agency.

Nokia is selling its handset business to Microsoft, enabling it to demand excessive royalties on its patents without fear of facing an infringement case against its own products, HTC told the agency.

Espoo, Finland-based Nokia said it will still have an interest in protecting research it spent billions of dollars to develop. The European Commission on Dec. 4 granted approval for the agreement, while warning that it would monitor Nokia’s licensing practices.

Two phone-service providers, Sprint Corp. and T-Mobile US Inc., told the commission that an order blocking HTC products in the U.S. would limit consumer choice. Nokia said consumers wouldn’t be harmed because there are plenty of phones by other Android manufacturers.

Hurts Competition

“The granting of an exclusion order on the basis of infringement of patents directed to a single saleable feature on a complex mobile device would negatively impact competitive conditions and the public welfare in the United States and also provide the patentee with a windfall of compensation,” T-Mobile said in a Nov. 13 letter to the agency.

U.S. Senator Ron Wyden of Oregon, a Democrat, said an order against HTC would hurt all smaller players in the market dominated by Apple Inc. and Samsung Electronics Co.

Nokia was the world’s biggest maker of mobile phones before losing its 14-year title to Samsung in 2011. It has sought to use patent licensing to recoup some of the money it spent on phone innovations. Those patents will stay with Nokia after it sells its handset business and licenses its technology to Microsoft.

HTC, Taiwan’s biggest maker of smartphones, has struggled to increase its presence in the U.S. and elsewhere by revamping its marketing strategy, including new advertisements featuring “Iron Man” film star Robert Downey Jr.

The company posted its first loss on record in October and forecast sales that missed analyst estimates. HTC had about 2 percent of the global smartphone market in the third quarter, compared with Nokia’s 3.4 percent, data compiled by Bloomberg show.

The case is In the Matter of Certain Electronic Devices, Including Mobile Phones and Tablet Computers, 337-847, U.S. International Trade Commission (Washington).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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