Apple and Nokia have finally settled their legal dispute over the use of the latter’s patents in the iPhone. On Tuesday, the two settled all their lawsuits and signed a patent agreement, under which Apple will start paying royalties to the Finnish firm starting in the second quarter.
Apple and Nokia sign a new business agreement
Along with the licensing agreement, the two also entered a new business agreement under which the Finnish firm will provide network infrastructure services to the U.S. firm. Meanwhile, Apple will resume selling Nokia’s health products, which are sold under the Withings brand name. The iPhone maker had stopped selling Withings products in its retail stores and online when the dispute broke out.
Analysts who earlier feared a protracted legal dispute were surprised by how quickly the two settled their dispute. Following the news of the settlement, Nokia stock jumped more than 6% in morning trading in Helsinki, Finland.
In a statement, Nokia Chief Legal Officer Maria Varsellona said, “(The agreement) moves our relationship with Apple from being adversaries in court to business partners.”
The dispute first came to light about six months ago when Apple refused to pay to use Nokia’s patents, accusing it of extortion. In reply, the Finnish firm sued the U.S. firm in 11 countries, including Germany and the United States, claiming that the company must pay for the technology it used in smartphones, tablets and other devices, notes The New York Times.
The financial terms of the agreement have not been made public.
However, Wiseharbor analyst Keith Mallinson told the BBC, “The agreement is per year, so it’s probably in the hundreds of millions of dollars range.”
Mallinson noted that the Finnish firm owns some very important patents, as it was the “pioneers of cellular standards,” and even a small royalty on iPhone sales would run into hundreds of millions of dollars.
Nokia still relevant in the mobile industry
The two were involved in several legal battles between 2009 and 2011 related to the technology used in mobile phones. They also struck a licensing agreement in 2011, and at that time, Nokia was still a big name in the mobile world, although it was being threatened by the rise of the iPhone.
Even though Nokia has been outsmarted by Apple and Samsung in the smartphone market, this legal battle highlights the importance the Finnish firm still holds in the industry. Similar to Ericsson, whose patents are widely used in iPhones and Android-based phones, Nokia is very serious about its intellectual property, which accounts for a major portion of its annual revenue, notes The New York Times.
After the lawsuit, the Finnish firm slashed its annual run-rate forecast for patent and brand licensing sales from 950 million euros to 800 million. In April, the company stopped giving an annual run-rate forecast altogether, notes Reuters.
Meanwhile, Apple’s troubles are not over yet, as it is still to settle a lawsuit with Qualcomm, which has accused it of not paying licensing fees amounting to billions of dollars.