LG Inks Patent Licensing Deal With Nokia

Nokia is certainly far from its glory days as a global leader in smartphones. As a matter of fact, ever since its smartphone business was acquired by Microsoft one year ago, the company has stopped selling smartphones outright. But it appears that Nokia is still making money out of smartphones -- other companies' devices, to be exact.

Indeed, Nokia and another high profile phone maker, LG, have just inked a patent licensing agreement. In this agreement, Nokia will be paid royalties by LG for the use of the Finnish company's patents on mobile communications. For the record, LG is the first company that joined Nokia's mobile licensing program since its smartphone devices and services were bought by Microsoft for $7.2 billion in 2014. 

It is not clear though exactly which patents of Nokia's are involved. What is clear though is that Nokia is fairly doing well without its smartphone business. 

Sure, Nokia may no longer have its mobile device division. But what it does have in spades are patents. The company holds an estimated 30,000 number of patents, all associated with 2G, 3G, and 4G mobile communications technology. To date, more than 60 companies have entered into licensing deals over these patents. 

Nokia now looks like a prime example of a once dominant mobile player who now operates behind the scenes. It is true that it can no longer compete with the Apples and Samsungs of the world, but because of its extensive patent portfolio in mobile technology, the company is fairly doing well for itself. 

During its dominant years, Nokia was able to compile a wide range of patents in mobile. Fortunately for the company, the patents it owns to this day are essential pieces of technology that other phone makers require in order to produce their respective mobile products. 

One of these mobile manufacturers, of course, is LG, a formidable player in the smartphone industry, in its own right. The South Korean phone maker's deal with Nokia comes with an arbitration clause (similar to a deal Nokia signed almost a couple of years ago with Samsung), which means that LG and Nokia could not come to terms regarding the royalty costs of the patents, and will now seek arbitration in order to finalize the royalty rate. The arbitration process could take a year or two to finish. But as for now, LG can enjoy the right to utilize Nokia's patent in building its products.