Context: This year, Nokia not only concluded its smartphone patent license renewal cycle with the top seven companies in the industry (February 8, 2024 ip fray article), but a few months later announced, without providing a name, its first patent license agreement with a Chinese automaker (LinkedIn post). That is still the only standard-essential patent (SEP) license deal between a Western patent holder and a Chinese car manufacturer to have been talked about in public. And last month, Nokia settled its SEP dispute with Verifone (August 14, 2024 ip fray article). After signing up all major Western makers of payment terminals, the focus shifted to China.
What’s new: Today, Nokia’s wireless licensing chief Patrik Hammarén mentioned in a LinkedIn post a deal on which the ink is not dry: PAX, a leading Chinese manufacturer of payment terminals, has taken a multi-year (and obviously royalty-bearing) patent license. Payment terminals are considered an Internet of Things (IoT) application. In the old days, carbon copies were made of credit cards, and by now the question is just whether those devices have fixed-line, WiFi or (increasingly) cellular connections.
Direct impact: Nokia is patiently and persistently building a basis for more license deals. The first is always the hardest, and it could be that Nokia is now ahead of other SEP holders (unless others have deals in place but remained silent about them, which is also possible) in terms of getting Chinese automakers, Chinese payment terminal makers and generally Chinese IoT companies to pay patent license fees. This is how to make the wireless patent licensing business grow.
Wider ramifications: This is a busy period in the SEP space, and ip fray works hard to stay on top of developments to keep its readership informed. ip fray was first to report on the invalidation of an InterDigital SEP in Germany (September 19, 2024 LinkedIn post by ip fray), Nokia’s Amazon streaming injunction (September 20, 2024 ip fray article; the related LinkedIn post has already attracted more than 200 likes, a new record for ip fray) and the headway Xiaomi made last week in a UK appeals court (September 22, 2024 ip fray article). Both SEP holders and implementers win some and lose some, but we all want to find out what happens (and why).
On its corporate website, PAX stated that it has sold 80 million devices globally. This suggests Nokia will have received a non-negligible amount of back-royalties, or if they made concessions in that regard (as SEP holders often do to faciliate deals), there is at least a lot of potential going forward.
PAX was founded in 2000 and claims to have served customers (merchants, banks, independent sales organizations (ISOs) etc.) in 120 countries.
Building on the Android or Linux operating systems (in fact, Android resides on top of Linux), PAX strives to “create the most beautiful payment terminals.”
Wireless technologies are leveraged by PAX not only to streamline and embellish the payment process, but also to enable other commercial benefits, particularly customer retention through loyalty reward programs and tailored marketing.
More than half of its $1B in annual revenues comes from Android-based SmartPOS (point of sale) solutions. PAX is a very R&D-oriented company that employs 900+ engineers and invests more than 10% of its revenue in R&D, which is actually a very high percentage for a company making relatively low-cost products. It may be no coincidence at all that a company that is so very much committed to R&D recognized the value of Nokia’s IP and agreed to pay reasonable royalties. PAX presumably want its own IP to be respected as well.
Nokia participates in some collective licensing efforts (patent pools), but in some contexts decides to take matters into its own hands. That’s why Nokia announced (even if we don’t know the name) a deal with a Chinese car maker before Avanci did so, and why Nokia has now announced a deal with a Chinese payment terminal maker before any patent pool would have tapped that opportunity. But pools offer transactional efficiencies when bringing multiple licensors and multiple licensees together. And in the end, if the licensing business thrives, pools thrive. Every bit of progress that Nokia makes, including the German injunction against Amazon (streaming is a field where Nokia is not participating in a pool so far), also increases the likelihood of pool licenses being concluded in the respective fields.
In other words, Nokia is doing some successful “pioneering” work that benefits the wider IP ecosystem.