Report: IPCom gets rich off Deutsche Telekom patent payment

Patent warehouse IPCom may have scored a massive royalty payout from Deutsche Telekom, with Reuters reporting the settlement to be worth hundreds of millions of euros.

"It is their biggest settlement so far," said one anonymous source with knowledge of the deal.

IPCom, which is backed by US asset managers Fortress Investment Group, doesn’t actually make phones – or anything else for that matter. It does however have over 1,000 patents, and in 2007 it bought some covering mobile communications from German engineering firm Bosch.

Later that year IPCom began patent infringement actions on a host of mobile phone companies, including Nokia, HTC and others, over patents covering areas such as system prioritization for routing emergency services calls. IPCom wants a reported €12bn from Nokia for infringement and is suing in the UK and Germany to get sales of handset sales banned from local markets.

Both HTC and Nokia doubt the validity of the patents themselves, but also complain that IPCom is abusing the patent process by getting around standards disclosure regulations. As mobile standards have evolved, all participants who contribute the technology required agrees to charge rates for IP that are Fair, Reasonable and Non-Discriminatory (FRAND).

Bosch agreed to FRAND, but IPCom isn’t signed up to the programme so it can charge in line with market forces – whatever it can get away with. Concern over such "submarine patents" has prompted a special session of the International Telecommunications Union to consider changing the disclosure rules.

If Deutsche Telekom has decided it's better to avoid such protracted litigation, as the report suggests, then Nokia and HTC will face a tougher time of it from IPCom. The money will be used to fund other lawsuits across Europe, and possibly worldwide, and may serve as a spur to other to pay up.

Deutsche Telekom and IPCom declined to comment. ®