Nokia 2005 Annual Report Download - page 41

There is a growing opportunity for Nokia to enter the systems integration and consulting business
that serves mobile operators, given its extensive understanding of the mobile communications
market and the rising importance of mobile data services and related IT systems for operators.
This will bring us into direct competition with traditional systems integrators and consulting
companies such as IBM, HP, and Accenture, as well as a large number of local and regional
systems integrators.
On the security infrastructure side of the Enterprise Solutions business, our principal competitors
are Cisco and Juniper Networks.
Seasonality
For information on the seasonality of our business, please see ‘‘Item 5.A Operating Results—
Overview—Certain Other Factors—Seasonality’’.
Patents and Licenses
A high level of R&D investment and rapid technological development has meant that the role of
IPR in our industry has always been important. Digital convergence, multiradio solutions,
alternative radio technologies, differing business models combined with large volumes are
increasing the complexity and importance of IPR further.
The detailed designs of our products are based primarily on our own research and development
work and design efforts and comply with all relevant and applicable public standards. We seek to
safeguard our investments in technology through adequate intellectual property protection,
including patents, design registrations and patents, trade secrets, trademark registrations and
copyrights that are used to protect proprietary features of our products. For example, in 2005 we
filed new patent applications for more than 1 200 new inventions on a global basis, and currently
our IPR patent portfolio provides protection for over 10 500 inventions. We believe that Nokia has
a strong IPR position, including across all major cellular and mobile communications standards,
data applications, user interface features and functions and many other areas. We also believe
that Nokia is one of the leading companies in the development of GSM/GPRS/EDGE/WCDMA
technologies, and that we hold a strong patent position in this field.
Nokia is a holder of numerous essential patents for various mobile communications standards. An
essential patent covers a feature or function that is incorporated into an open standard that all
manufacturers are required to meet in order to comply with the standard. In accordance with the
declarations we have made and the legal obligations created under the applicable rules of various
standardization bodies, such as the European Telecommunication Standardization Institute (ETSI),
we are committed to promoting open standards, and to offering to license and to granting licenses
for our essential patents on a fair, reasonable and non-discriminatory basis. We have entered into
several license agreements with other companies relating to both essential and other patents.
Many of these agreements are cross license agreements with major telecommunications companies
that cover broad product areas and allow Nokia to choose its preferred product design.
With the introduction of new mobile data and other evolving technologies, such as those enabling
multimedia services, our products and solutions include increasingly complex technological
solutions that incorporate a variety of patented and proprietary technologies. A 3G/WCDMA mobile
device, for example, may incorporate three times as many components, including substantially
more complex software, as our 2G/GSM mobile devices. As the number of entrants in the market
grows, as the Nokia product range becomes more diversified, and as the complexity of the
technology increases, the possibility of alleged infringement and other intellectual property claims
against us increases. As new features are added to our products and solutions, we are also
entering into licensing agreements with a number of new companies in the field of new mobile
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