Apple to pay patent licensing fees to Nokia, lawsuit dropped

Helsinki: The patent litigation between Apple and Nokia has finally come to an end. The two have agreed to enter into a patent licensing agreement, which will cover some of each others' patents, but not majority innovations of the iPhone.  The deal will settle all patent litigations and includes the withdrawal by both companies  of their complaints to the US International Trade Commission.

Apple will pay Nokia a one-time fee  and ongoing royalties as part of the deal.

The deal is likely to boost Nokia's second quarter earnings. Kimberly White/Reuters

The two firms were locked in a legal tussle since October 2009, when Nokia sued Apple  in over ten wireless handset patents in the United States, arguing the iPhone-maker was getting a "free ride" on technologies patented by Nokia. The 10 patents, which Apple reportedly refused to license, related to making phones able to run on GSM, 3G, and Wi-Fi networks. They include patents on wireless data, speech coding, security, and encryption, according to Nokia.

Nokia said the deal — which includes settling all litigation between the two and withdrawal of both sides complaints to the US International Trade Commission — would boost its second-quarter earnings, but said specific terms were confidential.

"The deal structure, a one-time payment as well as running royalties, suggests a fairly good outcome for Nokia," said Florian Mueller, independent specialist and blogger on patent battles.

"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," Mueller said.

Legal battles have become increasingly common in the cellphone industry since Apple and Google carved out a large chunk of the lucrative and quickly expanding smartphone market at the expense of older players.

On May 31 Nokia warned on second quarter sales and profits, while abandoning hope of meeting key targets just weeks after setting them, raising questions over whether its new CEO Stehen Elop can deliver on the turnaround he promised.

Nokia has lost initiative in the smartphone market to Apple's iPhone and Google Inc's Android devices, and at the lower end to more nimble Asian rivals.

"We're glad to put this behind us and get back to focusing on our respective businesses, " an Apple spokesman said.


Published Date: Jun 14, 2011 01:02 pm | Updated Date: Jun 14, 2011 01:02 pm