Nokia already earns 500 million euros ($647 million) a year from its patent royalties in key areas of mobile telephony and some analysts say a more determined application of its patent rights could boost its income by hundreds more millions of euros a year. Alternatively, a sale could generate billions of euros.

Either way, at a time when its future is being threatened by falling sales and a loss of market share, Nokia's patents have emerged as the struggling company's most valuable and stable assets. Their full exploitation could be crucial for its longer-term survival.

"They should be doing this. The only questions is: why did they wait so long?" said Alexander Poltorak, chief executive of patent consultancy General Patent Corp.

Nokia has already served warning to newcomers in the mobile industry with whom it doesn't yet have licensing agreements, saying it aimed to boost its royalty revenue. Last week it took action against two makers of devices based on Google Inc's (GOOG.O) Android software.

Nokia sued HTC (2498.TW) and ViewSonic for infringing its mobile technology and software patents, and others using Android are likely to be among the next targeted. Analysts say it's likely soon to go after top Chinese and Indian vendors, as well as Kindle-maker Amazon.Com Inc (AMZN.O).

"I would expect its next targets to include ZTE 000063.SZ, Huawei HWT.UL and Micromax," said analyst Tero Kuittinen at Finnish mobile firm Alekstra.

Nokia declined comment on other possible targets but spokesman Mark Durrant said in an email: "It's clear from last week's press release about actions against HTC, RIM and Viewsonic that we are taking new steps, moving beyond essential patents to other patents for which we have no obligation to license at all."

ZTE, Huawei, Micromax and Amazon were not immediately available for comment.

The reasons for the more aggressive stance are not hard to find. Sales of Nokia's new Lumia phones have not compensated for diving sales of legacy products as the group loses out to smartphone offerings from the likes of Apple Inc (AAPL.O), and analysts have said its cash reserves of 4.9 billion euros are likely to dwindle.

Both Standard & Poor's and Fitch Ratings have recently cut their credit ratings on Nokia to "junk" status.

TABLES TURNED

Nokia's position as a patent powerhouse - it ranks along with Qualcomm Inc (QCOM.O) and Ericsson (ERICb.ST) as a holder of the largest patent portfolios in the industry - goes back more than 20 years.

Back in 1989, Motorola forced it to pay more than $10 million to settle a patent infringement claim, one reason Nokia has ensured that the 45 billion euros ($58.5 billion) invested since then in mobile research and development has been as well protected by patents as possible.

Before that, the then conglomerate making everything from rubber boots to televisions had famously protected more innovations at its toilet paper business than at its cellphone unit.

So how much are Nokia's patents worth?

One pointer is that after a legal battle against Apple in 2009-2011, Nokia gets royalties from each iPhone sold.

Nokia also has the successful example of its partner Microsoft Corp (MSFT.O), which has signed up some 10 vendors - including HTC and Samsung (005930.KS) - to pay licensing fees for their Android devices.

HTC is paying Microsoft a roughly $5 royalty for each Android phone it sells.

A similar fee for its stronger wireless patent portfolio could give Nokia $800 million this year alone if it signed up just half of Android makers, although in reality such an amount is unlikely since Nokia already has cross-licensing deals with some of them.

$750,000 PER PATENT

Google's planned $12.5 billion acquisition of Motorola Mobility Holdings Inc (MMI.N) underlined the value of intellectual property in the fast-changing telecoms world, where established players are seeking to keep out newer rivals.

The search-engine giant is seen by many analysts as paying a high premium to patch over its lack of intellectual property in the wireless arena.

But the deal doesn't mean Nokia can't go after Google suppliers, as patents the Finnish company licensed to Motorola are not transferable to others even in an acquisition. Also such agreements typically only last between five and 10 years, although details of the 2010 deal aren't public.

Another example of the value of patents came last July when a group of six firms including Apple, Research In Motion and Ericsson paid $4.5 billion for 6,000 patents of bankrupt Nortel Networks, in the largest public sale of its kind.

The price was about three times what the sale had been expected to raise.

The auction, in which the group fended off Google, pushed the value of a single patent or patent family to $750,000 - a price tag which would value Nokia's 10,000 patents at $7.5 billion or roughly $2 a share.

Yet even that could undervalue Nokia's assets. Google is paying even more for a patent in its acquisition of Motorola Mobility, whose strong intellectual property portfolio offers an entry ticket to the wireless industry.

Bernstein said this is the maximum value Nokia could fetch for its patents, if it splits managing portfolio to a separate company and boosts royalty-revenues three-fold. A more likely if conservative valuation would be 0.5 euros per share, still a big chunk of Nokia's share price of 2.47 euros late on Friday.

So far Nokia Chief Executive Stephen Elop has said there were no plans for a sale, a stance that industry experts said made sense given its success in earlier patent litigation.

"You only get about 10 percent through a sale, compared with enforcing the patent," Poltorak said. "Nokia can make much more money enforcing the patents."

($1 = 0.7695 euros)

(Editing by David Holmes)

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