The Nokia acquisition and the global patents war – Impact on Indian Mobile Industry

It is a well known fact that the market for mobile phones in Asian countries is growing at a rapid pace. India can be identified as the second largest mobile market across the world, surpassed only by China[1]. And this is only set to grow – a recent survey on mobile handset markets in India (and China) by a well known investment management firm shows that the demand for mobile phones, particularly smartphones, is expected to grow at a compounded annual growth rate of 43% by 2016. Therefore, the recent acquisition of Nokia by Microsoft can be understood as a strategic move to capitalize on markets such as these.

But what is interesting to note is the increasing activity in the mobile market over the past few years, regarding both, companies and intellectual properties. To begin with, let us explore the existing industry. There is currently a fierce battle between international handset and service providers to grab a piece of this multi-billion dollar market, as seen here. Not ones to be left behind, Indian handset makers are also climbing up the ladder with Micromax, Karbonn and Lava already featuring in the top ten handset brands in India.

However, the journey to the top for Indian handset companies may get hindered if the recent global activities on the IPR front are anything to go by. To begin with, Ericsson recently filed a patent infringement lawsuit against Micromax, one of the first lawsuits against an Indian mobile device maker. As an outcome, Micromax ended up shelling out a chunk of its earnings in royalties to Ericsson.

Now, the recent acquisition of Nokia’s devices and solutions business by Microsoft only indicates more such patent enforcements and litigations in India. Microsoft is believed to have earned more than $222 million in revenues by licensing its patents on mobile OS worldwide in the quarter ending June 2013 alone. With its current vested interests in Nokia devices, Microsoft will perhaps be looking to make its presence felt in the Indian market by enforcing the vast patent portfolios on mobile devices and software through licensing or litigating with local manufacturers.

The general trend among global players (Wikipedia page here can be testimony) seems to be to use patents as a weapon to block competition in the mobile industry, which could come from local device makers.  Post-acquisition Nokia has also given indications of going after device manufacturers worldwide to enforce its patents.

With this data, and given that India is the fastest growing mobile device markets for the next few years to come, it is highly likely that a lot of mobile device related patent litigation activity can be expected to be seen in India in the coming days.

So what can home grown companies do to protect themselves and their intellectual properties?

They say defence is the best strategy, and we agree. In our opinion, local companies involved in mobile device manufacturing and application building should take this news in a positive stride, continue to engage more and more in innovation and finally and most importantly, protect their innovation through IPRs. After all, there’s no use crying over spilt milk, but if you’re a young Indian mobile company, why allow the milk to spill in the first place?

Do you agree with our views? Do comment and let us know.


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