Our reader “Paniagua” has sent us a link of RIM’s FORM 6-K, filed December 21, where it has disclosed that the one payment made to Nokia in recent patent agreement is $65 million. This is what the Form says about the patent deal.
On December 21, 2012, Nokia and RIM announced that they have entered into a new patent license agreement. The agreement will result in the settlement of all patent litigation between the companies and Nokia’s dismissal of all pending actions in the United States, United Kingdom, Canada and Germany. The financial structure of the agreement includes a lump sum €50 million (approximately $65 million) one-time payment, which has been recorded in the Company’s consolidated statement of operations in the third quarter of fiscal 2013.
For your information RIM and Nokia had licensed agreement since 2003 and only in year 2011 RIM sought to breach the agreement. Nokia took RIM to a tribunal, which ruled in favour of Nokia. Read more below from our earlier article,
A Nokia spokesperson told the Guardian: “Nokia and RIM agreed a cross-licence for standards-essential cellular patents in 2003, which was amended in 2008. In 2011, RIM sought arbitration, arguing that the licence extended beyond cellular essentials. In November 2012, the arbitration tribunal ruled against RIM. It found that RIM was in breach of contract and is not entitled to manufacture or sell WLAN products without first agreeing royalties with Nokia. In order to enforce the Tribunal’s ruling, we have now filed actions in the US, UK and Canada with the aim of ending RIM’s breach of contract.”
Thus, it looks like this one time payment takes care of one year of the non-payment due to contract breach. In other words, Nokia may get this amount every year from RIM as the royalty payment.
Anyway, this is good windfall for Nokia and that too at a time when it certainly needs more cash !!