In the tech world, legal battles are commonplace. This year, investors have seen a number of high-profile technology companies involved in some important legal proceedings. Today, Nokia (NYSE:NOK) is in the news over such a situation, as the company sues Amazon (NASDAQ:AMZN) over patent infringement related to some of the video streaming technology used by the e-commerce platform. Shares of NOK stock are down a little more than 2% on the news, with AMZN stock surprisingly rising almost 2% in early afternoon trading.
This lawsuit appears to stem from the underlying video compression and delivery technology Amazon uses for its Prime Video and Twitch streaming services. Interestingly, Nokia is reportedly suing Amazon in multiple jurisdictions in a bid to recoup some of the investment the company made in this streaming technology, which Nokia argues Amazon and others are using for free.
Nokia, like other tech companies, owns a portfolio of patents tied to various technologies. We’ve seen other companies attempt to monetize their portfolio of patents via lawsuits, which may or may not pay out. Today’s price action with NOK stock suggests the market is brushing this announced lawsuit off, but there may be something here.
Let’s dive into what this legal action means for investors.
NOK Stock Dips, Despite Announcing Big Lawsuit
Nokia’s push to force Amazon and other major technology companies to obtain a license for what Nokia claims is its proprietary technology could be a big catalyst for the company if it’s able to convince courts around the world to accept its argument. Nokia is reportedly seeking remediation via courts in the U.K., Germany, India and the EU, in addition to its U.S. lawsuit. Thus, there are a myriad of factors to consider when attempting to place a value on this legal action.
Every jurisdiction is different, and there’s no guarantee Nokia will be successful in any or all of these markets. Indeed, Nokia will be taking on significant legal costs to carry out its patent infringement lawsuit strategy. The company’s strategic shift away from smartphone development to network infrastructure is one that requires that its proprietary technology be protected. Now, it will be up to the court system to determine the extent to which Nokia should be compensated for the use of its proprietary technology by these industry giants.
This will certainly be a key catalyst investors will want to keep an eye on when it comes to Nokia. Indeed, the meme stock mania of 2021 is over, and Nokia’s stock price has been hit hard by a flurry of macro and company-specific headwinds. Investors in this beaten-down legacy tech company are in staunch need of a catalyst. Let’s see if this legal action provides what many retail investors are hoping for.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.