Nokia sells 450 wireless and video patents to Sisvel

The patents are used in GSM, 3G and LTE devices, and for video encoding optimization technologies

Nokia has sold 450 wireless and video patents and patent applications to Sisvel International, an Italian patent licensing company.

The patents cover technologies used in GSM, 3G and LTE mobile devices, as well as in video encoding optimization systems, according to Sisvel.

Nokia will retain a license to use the intellectual property covered by the deal, which involves around one-sixtieth of its portfolio of pending and granted patents.

About 350 of the patents and patent applications have been declared by Nokia to be essential to standards for GSM, 3G and LTE (Long Term Evolution) wireless systems, Sisvel said. That would mean that not only Nokia, but also other mobile phone manufacturers, are likely to use them.

Sisvel will honor existing licensing deals for the patents between Nokia and other companies, said Sisvel, which is building a "patent pool" for LTE wireless systems. The company already operates a patent pool for the DVB-T digital TV broadcast system, and manages licensing for the patents on MP3 and MPEG Audio compression systems.

Nokia's patent portfolio still includes more than 30,000 individual patents and patent applications, it said. The strength of Nokia's portfolio was shown when it last year settled a legal battle with Apple. The settlement included a lump sum and ongoing royalty payments from Apple to Nokia.

Patents have become a weapon wielded by wireless market leaders including Apple and Samsung, and also a financial lifeline for struggling companies. Kodak, for example, is hoping it can stay afloat by selling off its patent portfolio, while Google is acquiring Motorola Mobility largely to get its hands on the company's patents.

The mobile device royalties market is worth close to US$20 billion per year, according to ABI Research. For GSM and 3G handsets, the cost of licensing essential patents can range from under 4 percent of the phone's price if the vendor has a very strong patent portfolio, to well over 10 percent. The average royalty paid is between 7 percent and 8 percent, ABI said.

Selling some of its patent portfolio would in effect allow Nokia to take in several years of expected future revenue as a lump sum now.

"Nokia is going to spend a lot of money, and this is a way to raise funds," said Carolina Milanesi, research vice president in Gartner's mobile devices team.

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