Nokia Corp.’s $16.6 billion takeover bid for Alcatel-Lucent (ALU) may have identified a new area of patent infringement claims for patent assertion companies such as Vringo Inc. (VRNG), WiLAN Inc. (WILN), Conversant, Inventergy Global Inc. (INVT) and Acacia Research Corp. (ACTG).
“Nokia is signaling there’s a whole lot of overlap between it and Alcatel on wireless technology,” said Dex Wheeler, chief analyst at M-CAM, a patent investment advisory firm in Charlottesville, Virginia, in an interview. “This could send a pretty strong signal of value in the wireless realm. This could be about 5G.”
So far, there’s no evidence of any suits being filed against Alcatel by the likes of Vringo, WiLAN, Conversant, Inventergy and Acacia, Wheeler said.
“It doesn’t mean letters haven't been sent,” he said. “These guys jump at any statement of value. I would not be surprised if they were looking at it.”
If the patent assertion companies get the suits in before the deal closes before the deal goes through “it’s fair game,” Wheeler said.
“Vringo, WiLAN and Acacia are experienced enough and big enough to be able to make a pretty good case with the types of technology we’re talking about. I’m not sure it should deter Nokia from doing the deal.”
If such suits do get filed, Alcatel may be under pressure to settle them before the deal can be closed, Wheeler said. Nokia’s relationships with the NPEs may enable Alcatel to settle such claims on relatively favorable terms, he said.
In the meantime, if and when Espoo, Finland-based Nokia closes on the acquisition of Paris-based Alcatel-Lucent, the combined companies may be reluctant to see themselves sued on Nokia patents that have been sold off to NPEs, Wheeler and other market observers say.
If the NPEs own the patents outright, the NPEs may be suing the combined companies on patents originally owned by Nokia. In some cases, Nokia may have a revenue share in the plaintiff's success.
“We may see some deals unwound,” said one market observer who requested anonymity because the matters are confidential.
For his part, M-CAM’s Wheeler said such deals may be difficult to unwind with extracting value for the NPEs.
“A pure licensing deal would be easier,” Wheeler said. On such a licensing deal Nokia might have a final approval right and act as a consultant. “Nokia might be able to block suits against Alcatel.”
Some sales of patent portfolios come with third-party reversionary rights to reacquire the patent portfolio upon the occurrence of certain events, such as changes of control or bankruptcy exigencies, according to a June 2013 article on Strategic Patent Acquisitions, Evaluating and Acquiring Patent Portfolios, by Weil Gotshal & Manges partners Charan Sandhu, Jeffrey Osterman and Kyle Krpata.
“Most likely—both ALU and Nokia had after acquired affiliate provisions in sale agreements, so not an issue (or smaller issue),” said Erich Spangenberg, founder of IP Navigation Group in an email.
Brett Young, a Nokia spokesman, said in an email “it was too early to speculate on topics like this.”
Simon Poulter, a spokesman for Alcatel-Lucent, said in an email that “with the proposed merger only announced last Wednesday, there is a long process ahead for both companies before closure, with many aspects of integration to be covered in the months to come. In the meantime, we are not providing comment on what may or may not happen in the future regarding IP.”
Nokia may also be able to monetize Alcatel’s patent portfolio based on the estimates provided by M-CAM in 2012. The patent investment advisory firm noted in a report that at one time Alcatel used its patent portfolio to secure $2.1 billion in financing from Credit Suisse Group and Goldman Sachs Group. M-CAM’s analysis estimated the value of that portfolio at between $7.3 billion and $7.7 billion.
Many parts of ALU’s IP portfolio are technologies applicable to the realm of national security. The bulk of those properties come from legacy positions held by Bell Labs, and to a lesser extent their French equivalents.
Cliff Weinstein, an executive vice president of business development at Vringo, declined to comment.
New York-based Vringo paid $22 million to Nokia on August 9, 2012 for a portfolio comprised of 124 patent families with counterparts in certain jurisdictions world-wide.
Under the terms of the purchase agreement, to the extent that the gross revenue generated by such portfolio exceeds $22 million, Vringo is obligated to pay a royalty of 35% of such excess.
The portfolio encompasses technologies relating to telecom infrastructure, including communication management, data and signal transmission, mobility management, radio resources management and services.
Declarations were filed by Nokia indicating that 31 of the 124 patent families acquired may be essential to wireless communications standards. Vringo also acquired certain patent portfolios during 2012 and 2013, and have filed over 60 internally developed patent applications since 2013.
Tyler Burns, a spokesman for Toronto-based WiLAN, said the dust still needs to settle from the merger and declined to comment further.
WILAN, based in Toronto, in July 2014 signed a patent license agreement with Nokia Networks which gives Nokia Networks a multi-year license to a broad portfolio of wireless patents used in a range of wireless infrastructure products offered by Nokia Networks.
WiLAN first signed a patent license agreement with Nokia Corp. in December 2006 related to WiLAN's then current patent portfolio. The patents licensed under this new agreement with Nokia Networks include patents related to CDMA, WCDMA, GSM, HSPA and 4G/LTE technologies.
Under a separate patent acquisition agreement between the parties also announced in July 2014, WiLAN will acquire from Nokia Networks a portfolio of patents with worldwide coverage related to various current and future wireless handset and infrastructure technologies. All other terms and conditions of the license and acquisition agreements were confidential.
In September 2013, WiLAN granted Alcatel-Lucent a multi-year license to certain WiLAN patents related to wireless products in consideration for which Alcatel-Lucent will make a series of payments to WiLAN throughout the term of the license. The parties agreed to settle all pending litigations in the United States District Courts for the Southern District of Florida and the Eastern District of Texas involving CDMA, 3GPP, HSPA, Wi-Fi and LTE technologies.
Under a separate patent acquisition agreement between the parties also announced today, WiLAN will acquire from Alcatel-Lucent a portfolio of patents and pending applications related to current and next-generation wireless technologies with broad worldwide patent coverage. All other terms and conditions of the license and acquisition agreements are confidential.
Inventergy Global, based in Campbell, Calif., announced in July it acquired a patent portfolio from Nokia, a leader in network infrastructure, location intelligence and advanced technology development. The portfolio includes 16 patent families comprised of 77 patents and patent applications pertaining to IP Multimedia Subsystems (IMS).
The acquisition was Inventergy's third significant patent acquisition in the past year and increased the company's portfolio to more than 750 patents globally.
The acquired patents address key telecommunications infrastructure technologies that increasingly play a major role in the industry's ongoing build-out of high-speed, next generation cellular services for handsets, tablets, notebooks and other mobile devices.
The acquired patents have wide geographic coverage in the United States and 25 other countries in Europe and parts of Asia, including Japan and China. The portfolio, among other things, applies broadly to IMS technologies and spans a number of key market segments including telecommunications operators, hardware and software companies, equipment companies, and end-user equipment vendors.
Inventergy officials couldn’t be reached for comment.
Conversant, based in Toronto and Plano, acquired a portfolio of more than 1,200 patents and applications that have been declared to be essential to operation of 2G, 3G and 4G long-term evolution mobile networks and 800 wireless implementation patents. All the patents were originally filed by Nokia.
Conversant officials also couldn’t be reached for comment.
In December, Acacia, based in Newport Beach, Calif., announced that a subsidiary has sourced rights in additional patent portfolios from Nokia Networks. With these new portfolios, Acacia’s subsidiary now controls marquee portfolios relating to 2G/3G/LTE and LTE-Advanced technologies.
In December 2012, Acaia announced that a subsidiary had acquired patents for Wireless Infrastructure and User Equipment Technology from Nokia Siemens Networks relating to second (2G), third (3G) and fourth (4G) generation wireless technologies.
Acacia officials also couldn’t be reached for comment.
To reach the reporter responsible for this story please contact Dan Lonkevich at 707 318-7899 or at email@example.com