China might block Microsoft purchase of Nokia's assets unless patent fees are reduced

China might block Microsoft purchase of Nokia's assets unless patent fees are reduced
A published report citing Taiwan's handset supply chain, states that China's Ministry of Commerce is looking for antitrust violations that would take place if Microsoft is allowed to go ahead with its purchase of Nokia's Devices and Services business. The sources claim that the Chinese government might ask both Microsoft and Nokia to reduce their patent fees in return for a thumbs up on the deal.

This wouldn't be the first time that China has held up a major tech transaction. Back in 2012, the Chinese government held back on approval of Google's acquisition  of Motorola until the former promised that it would keep a free licensing policy for the Android OS. Now, the Chinese government is worried that once the Microsoft purchase closes, Nokia will use its patents (which it retains in the deal) to bring in some revenue by forcing Chinese handset makers to pay licensing fees.

Nokia has not gone after manufacturers in the country, some of whom have possibly been infringing on its patents, since it was selling smartphones in China. Once smartphone sales belong to Microsoft, there is nothing holding back the Finnish based firm from demanding that Chinese OEMs sign licensing deals in order to use Nokia's patents. The Chinese manufacturers are using this situation to request that the Ministry of Commerce demand lower patent fees from both Nokia and Microsoft, using approval of the pending transaction between them as leverage.

source: DigiTimes

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29 Comments

29. 7thspaceman

Posts: 1597; Member since: Feb 14, 2011

whether China approves the deal or not the deal will go through China. is a big Market but Microsoft and Nokia can make good profits off of selling their products to the rest of the World whose combined numbers are bigger than Chana's population. Nokia has already taken some of the deals money China' disapproval of the deal wont kill it. Microsoft knows it needs Nokia's assets to stay a player in the mobile world and wont give up now that the deal is set up in their favor

28. timezone

Posts: 87; Member since: Jun 16, 2013

Guaranteed every one screaming about the evils of patents would be screaming louder if one of your ideas were stolen. This is not about someone just coming up with an idea. In many cases these companies have spent millions of dollars to develop the idea. What protects companies from over paying are when a patent comes under FRAND. That was why Microsoft sued Motorola. Motorola and then Google wanted extortion fees from Microsoft. These patents were clearly under FRAND and the courts agreed with Microsoft. They still owe royalties but not what Google wanted from Microsoft. I do agree there is an issue when companies buy patents, don't have any product to sell and only make money by extorting payments from everyone. Nokia will probably be in a grey area. They won't have a phone to sell anymore but they were the original owners of the patents spending lots of money to develop the concepts.

24. Taters

Posts: 6474; Member since: Jan 28, 2013

Good on China. Something needs to be done about patents and done soon. Imagine if water and toilet paper was patented and every manufacturer had to pay a license fee to sell them. These lame things that Nokia and Apple have patent should have an expiry date or something because they totally abuse it. This isn't about stealing, you just can't just call dibs on something you did first and keep it forever and no one else can use it just because you patented it. That is what Apple and Nokia so called ideas and innovations come from. They saw the land first, which someone else would have eventually discovered and they lay claim to the technology. Something needs to be done about this bs and it needs to be done quick. These companies are just pricing out smaller companies that can't afford to pay everyone a license fee.

25. papss unregistered

You forgot to add google/moto to yohr fanboy rant... just saying.

23. reh1965

Posts: 19; Member since: Dec 06, 2013

Chinese manufacturers are able to sell cheap due to infringements and governement sponsorship. Patents will help innovation, not block it!

21. freebee269

Posts: 543; Member since: Aug 10, 2012

so what i take from reading this article is that china oem's are known for infringing on nokia patents. the goverment knows that also so they are trying to protect their local oem's by using this deal as leverage to get the licensing fee's reduced in a deal. to me, this sounds like a corrupt government endorsing corrupt practices. it's a shame. and they might get what they want.

12. timezone

Posts: 87; Member since: Jun 16, 2013

Fireblade, so untrue. First they don't have the market power to raise prices. Second Microsoft knows the marketshare gains have been from selling low end phones in emerging markets. Microsoft will not raise prices in this price segment.

17. Altair

Posts: 367; Member since: Feb 02, 2012

Its all about Chinese OEM:s who are used to copy others patented tech without payment. Now they are whining to goverment, because there is someone who can make them pay.

18. fireblade

Posts: 717; Member since: Dec 27, 2013

without payment? FYI, Chinese OEMs still pay Nokia, but with low price. The only thing Chinese OEMs copy is the design and it only happens from unknown Chinese brands. Famous brands like Lenovo, Oppo, ZTE & etc., they don't do dirty works (steal patent) and they have their own designs.

11. timezone

Posts: 87; Member since: Jun 16, 2013

alterecho, . Your comment is ridiculous. Truth be told China's stall is not based on antitrust. They just want assurances from Nokia on how they will use their patent portfolio. Microsoft as many people here are fast to claim has little marketshare in the smatphone market. There is nothing about this purchase that can concern any country. If there was a concern then they should have first stopped Google from Purchasing Motorola's Mobility unit. With Googles marketshare this purchase should have raised concerns long before having any concerns with Microsoft's purchase of Nokia's phone unit. Compared to the Google purchase the Nokia, Microsoft deal shouldn't and didn't raise any eyebrows.

9. alterecho

Posts: 1106; Member since: Feb 23, 2012

Looks like China is was the only country that read the fine print thoroughly. Rest of the governments should be ashamed.

15. Altair

Posts: 367; Member since: Feb 02, 2012

China is the one country in the world, who is famous about copying EVERYTHING. Even goverment knows that and tries to make it happen in future as well.

26. UrbanPhantom

Posts: 949; Member since: Oct 30, 2012

Three cheers for the government of our former cold war enemy? How many of you that are doing the cheering want to live in China? I thought so... ;o)

7. sonisoe

Posts: 440; Member since: May 06, 2009

smart...

6. timezone

Posts: 87; Member since: Jun 16, 2013

I thought antitrust was to stop market dominance that may erode competition and push prices up for consumers. China is going after the surviving company and telling them how to run their company. This doesn't sound right. Even though Nokia may be out of the phone business, for at least a few years, those patents were hard won. Nokia developed the technology and deserve to protect their intellectual property. It is FRAND that protects the technology in general use by the other manufactures.

5. fireblade

Posts: 717; Member since: Dec 27, 2013

For the sake of poor people who live in 3rd world countries, please block the purchase. If the purchase happens, the price of Chinese phones will skyrocket.

14. Altair

Posts: 367; Member since: Feb 02, 2012

Yeah all poor people at 3rd world countries, make it happen so copying and stealing is allowed more easily. This kind of action will bite your poor arse sooner or later. Its always poors stealing from rich. Then they are the first at wall defending own property once they get something.

16. fireblade

Posts: 717; Member since: Dec 27, 2013

FYI, Chinese manufacturers don't steal Nokia's patent. They buy it with low price. If the purchase happens, MS will control the price.

22. freebee269

Posts: 543; Member since: Aug 10, 2012

of course they'll control the price, it's their patents. what china is trying to do is ensure they can continue to get lower fee's than what anyone else in the world is spending for the same licenses. basically their trying to get over.

4. WHoyton1

Posts: 1635; Member since: Feb 21, 2013

Ladies and gentlemen lets hear a round of applause for china now...they stand up to the trojan horse!!

3. 7thspaceman

Posts: 1597; Member since: Feb 14, 2011

I do not think China will stop this transaction between Microsoft and Nokia because both companies are for it, the European Union, is for it, American government trade and commerce is going to give it their OK. the rest of the world except some people in Finland are not against it. if this deal falls through because of the Chinese are scared Microsoft could be in big trouble because Nokia's board of directors will force Elop to make Android smart phones as well as Windows smart phones which would sell well enough to cut into Windows smart phones sales. Not many OEM's are making Windows smart phones. 4 OEM's in fact are making Windows smart phones, except for Nokia other MS OEM's make only 2 models of Windows smart phones at most and may stop making them at all. Microsoft needs to have it's OWN smart phone and Tablet Company to stay in the Mobile devices sales Market.

2. Sire3008

Posts: 87; Member since: Sep 26, 2013

Chinese manufacturers know how to steal other people's intellect and modify them as their own. This is a move by the govt to endorse robbery.... What am I saying...its frigging China.

8. Ashoaib

Posts: 3309; Member since: Nov 15, 2013

So what? as a result we are getting cheap products... will you get any benefit when nokia will start monopolizing its patents and will start asking higher price to use the patents? will nokia pay anything to you? For sure NO. Cheap handsets will become expensive for you, me everyone... thumbs up for china.. block this sale plz or force nokia to charge 2 or 3 dollars per phone for patents...

27. Alex123

Posts: 241; Member since: Oct 17, 2012

you said "force"? Communist like to force right?

1. itsdeepak4u2000

Posts: 3718; Member since: Nov 03, 2012

Yes very good and same should be applicable to other countries also if possible.

10. Ashoaib

Posts: 3309; Member since: Nov 15, 2013

Exactly, thumbs up for china. I wish US n europe ever care about the price increase, they just care about higher margins for their companies so they can get a share of their tax

13. Altair

Posts: 367; Member since: Feb 02, 2012

You are basically cheering up for a country wich is known for shameless copying for years after years.. You wish that thiefs can steal even more. I bet you come from China by yourself.

19. Doakie

Posts: 2478; Member since: May 06, 2009

I guess you're new to the Internets. We've had plenty of discussions on here about the nature of design I.P. and how in Asia copying is a form of flattery and isn't frowned upon. So what they do in their own country as tradition isn't any of your business. If European or American companies don't care for the copy cat electronics industry in China don't bother trying to break into China. There's billions to be made all over the world.

20. av911 unregistered

With your grammar, YOU sound like you're from China.

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