Just one year after acquiring 1500 patents from Microsoft, Xiaomi is moving further into the global intellectual property pool once more. Nokia Oyj (ADR) (NYSE:NOK) has announced entering into several patent licensing and purchase agreement with Xiaomi, the Chinese wearable and smartphone makers. Xiaomi is also expected to become a major customer of Nokia’s networking equipment.
The transaction mainly covers three sections. The two companies have signed a licensing deal that covers cellular standard essential patents. Xiaomi has purchased an undisclosed patents from Nokia. On its part, Nokia will make available network equipment to Xiaomi and the two companies will partner in building IP transport infrastructure. The two companies will also further their cooperation into other sections like artificial intelligence, augmented and virtual reality and Internet of Things.
In a statement, Xiaomi chairman and CEO Lei Jun said his company is working to deliver exiting innovations in technology globally. He added that Xiaomi is commitied to establishing strong, long-term and sustainable business partnerships with leading technological companies. Jun said the collaboration with Nokia will open an opportunity to take advantage of its leadership in building large-scale, formidable and high-performance networks.
It’s however remains unclear how Nokia’s patents are related to those that Xiaomi acquired from Microsoft. At one time, Nokia and Microsoft were close partners before Microsoft purchased Nokia’s handset business.
The announcement has however shed some light to several ongoing stories in the technological space. It also an indicator on how patents continue to move large businesses in the industry.
Recently, Apple and Nokia settled a long patent dispute which had threatened to cripple Nokia’s wearables business. The financial value of many of these deals is not always made public. But according to documents, a licensing deal between Microsoft and Samsung was worth $1 billion a year. Another peculiar feature in patent disputes is how they are used by companies to bargain for larger business deals. For the case of Nokia and Xiaomi, Xiaomi is expected to become a client of Nokia’s network equipment. It will but network equipment built to deliver low power requirements, high capacity needed by large datacenter operators and web providers.