HTC Corp. (2498), Taiwan's largest smartphone maker, agreed to pay royalties to Nokia Oyj (NOK1V) to end a patent-infringement dispute that could have resulted in its devices being kept out of the U.S. market.
Financial terms of the settlement weren't disclosed. Each company will gain access to the other's patented technology and will explore "future technology collaboration opportunities," they said today in a statement. The U.S. International Trade Commission in Washington was scheduled to announce Feb. 10 whether it would issue an import ban on HTC devices.
"This agreement validates Nokia's implementation patents and enables us to focus on further licensing opportunities," Paul Melin, chief intellectual property officer at Espoo, Finland-based Nokia, said in the statement.
Nokia was once the world's largest maker of mobile phones, only to see its title collapse as customers flocked to the design and technology advancements in Samsung Electronics Co. and Apple Inc. devices. Nokia is selling its phone business to Microsoft Corp., a deal that's expected to close this quarter, to focus on networking equipment. It's retained patents on fundamental phone technology as part of a program to try and recoup the billions of dollars it spent on research.
An ITC judge in September found that HTC infringed two Nokia patents for a way to remove errors in radio signals and 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, once the leading smartphone maker in the U.S., has struggled to gain traction for its newest devices, including the HTC One. HTC is counting on updated versions of the One and its first wearable device to turn around the company after two straight annual declines in revenue.
"Nokia has one of the most preeminent patent portfolios in the industry," HTC General Counsel Grace Lei said in the statement. "As an industry pioneer in smartphones with a strong patent portfolio, HTC is pleased to come to this agreement, which will enable us to stay focused on innovation for consumers."
Many of Nokia's patents cover technology that's used across the industry. The case is part of a broader debate over whether patents that cover fundamental technology related to industry standards should be treated differently than, for instance, patents on specialized features.
The Obama administration has come out for limited restrictions on so-called standard essential patents. It overturned an import ban won by Samsung against Apple because it said the ITC didn't fully address the criteria the administration laid out to determine if an import ban is appropriate.
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 reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net
To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net
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