Patent Wars: Apple Agrees to Pay Nokia Patent Licensing Fees

It’s over. The patent battle between Nokia and Apple just ended not with an injunction, but with a press release citing a license agreement and payments from Apple to Espoo.

Nokia on Tuesday notched a valuable win against rival Apple, with the U.S. company agreeing to pay the Finnish handset maker a one-time sum to settle long-standing patent disputes as well as royalties for current licenses. Photo: My Retail Media/Flickr

Apple will make undisclosed payments to Nokia, ending the long-running patent dispute between the two companies. Nokia has announced that Apple will pay to use the Finnish phone giant’s technologies, in a move that finally marks the end of a long-running legal dispute between the two firms.

“The agreement will result in settlement of all patent litigation between the companies,” the Finnish firm said. The u-turn comes after both firms had spent years accusing each other of infringing their patents. Nokia initially sued Apple for patent infringements in 2009. Apple countersued, but Nokia extended the action in December last year. Disputed areas included 3G and Wi-Fi technology, as well as caller ID and touch interfaces.

The Finnish phone-maker Nokia could receive a one-off payment of more than €800 million from Apple and receive further royalties of €8 per iPhone sold in future, after winning a long-running patents case. The development could also mean that other manufacturers are more likely to have to pay Nokia for using similar technologies.

“We are very pleased to have Apple join the growing number of Nokia licensees,” said Nokia’s chief executive Stephen Elop. “This settlement demonstrates Nokia’s industry-leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market.” The company also subsequently hinted that it may pursue makers of smartphones using Google’s Android mobile operating system, of which 36m were sold in the first quarter of 2011.

Florian Mueller, an independent specialist and blogger on patent battles, said that “the deal structure – a one-time payment as well as running royalties – suggests a fairly good outcome for Nokia”. He added: “Maybe Nokia could have continued to play hardball and got an even better deal if it didn’t face the challenges it undoubtedly has. But this looks like a fairly important victory.”

He suggested that Apple would benefit if Nokia pursues Android handset-makers, because they have smaller margins and would be less easily able to afford royalties. Android dominates the smartphone market with a 36% share, ahead of Nokia’s Symbian with 27% and Apple’s 17%, according to the research company Gartner.

In a statement, Apple said “Apple and Nokia have agreed to drop all of our current lawsuits and enter into a license covering some of each others’ patents, but not the majority of the innovations that make the iPhone unique. We’re glad to put this behind us and get back to focusing on our respective businesses.”

Market watchers say Tuesday’s settlement is crucial for Nokia which has been trying to restrict unlawful use of its innovation base as it struggles amid stiff competition in the smart phone sector, including from Apple’s iPhone, RIM’s Blackberry and Asian manufacturers. Nokia’s shares are still down about 25% since 30 May, representing a €5.5 billion fall in market capitalisation for one of Europe’s biggest technology companies.

During the last two decades, Nokia has invested approximately EUR 43 billion in research and development and built one of the wireless industry’s strongest and broadest IPR portfolios, with over 10,000 patent families. Nokia is a world leader in the development of handheld device and mobile communications technologies, which is also demonstrated by Nokia’s strong patent position.

The case settled on Tuesday was filed in 2009 by Nokia, which said it had filed a patent 10 years ago that covered the use of touchscreen technology in phones. Ironically, announcing the iPhone in 2007, Steve Jobs, Apple’s chief executive, said of the multi-touch screen interface: “Boy, have we patented it!”, in a warning to would-be rivals. [via The Guardian (UK), USA Today and BBC]

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