On 4 November 2013 Nokia announced a 5 year extension to a patent licence agreement between Samsung and Nokia. The licence was due to expire at the end of 2013. Under the agreement Samsung will pay
On 4 November 2013 Nokia announced a 5 year extension to a patent licence agreement between Samsung and Nokia. The licence was due to expire at the end of 2013. Under the agreement Samsung will pay additional royalties to Nokia from 1 January 2014 onwards, the exact amount to be determined by a binding arbitration expected to be concluded in 2015.
Comments
The extension of a licence of itself is not unusual. Given that the licence agreement is already in place, and seemingly is working, the question is why would the parties not want to renew it? Samsung has certainty that it can carry on selling products embodying the technology of the licensed patents, and Nokia derives revenue.
What is unusual in this case is that Samsung and Nokia have clearly been unable to agree on how much Samsung should pay for the licence. Such details are usually agreed upon before a licence is entered into. However, here the parties have agreed to refer this question to a binding arbitration. Given that the arbitration is not expected to conclude until 2015, one can infer that it will be a substantial arbitration requiring a lot of detail to be gathered for it.
When negotiating contracts clients should be aware that the failure to agree all terms of an agreement, whether for an extension or otherwise, does not automatically mean that agreement cannot be reached. Binding arbitration can be a useful tool to save an otherwise unsalvageable contract and maintain a relationship with the other party.
Nokia's announcement of the licence extension can be read here.
Comments
The extension of a licence of itself is not unusual. Given that the licence agreement is already in place, and seemingly is working, the question is why would the parties not want to renew it? Samsung has certainty that it can carry on selling products embodying the technology of the licensed patents, and Nokia derives revenue.
What is unusual in this case is that Samsung and Nokia have clearly been unable to agree on how much Samsung should pay for the licence. Such details are usually agreed upon before a licence is entered into. However, here the parties have agreed to refer this question to a binding arbitration. Given that the arbitration is not expected to conclude until 2015, one can infer that it will be a substantial arbitration requiring a lot of detail to be gathered for it.
When negotiating contracts clients should be aware that the failure to agree all terms of an agreement, whether for an extension or otherwise, does not automatically mean that agreement cannot be reached. Binding arbitration can be a useful tool to save an otherwise unsalvageable contract and maintain a relationship with the other party.
Nokia's announcement of the licence extension can be read here.