Nokia rose as much as 4.1 percent in Helsinki trading. The agreement will bolster the Devices & Services unit's second- quarter profitability, Espoo, Finland-based Nokia said in a statement today. The details of the contract, under which Apple will pay Nokia an undisclosed sum and royalties for the term of the agreement, are confidential, the Finnish company said.
The two mobile-phone makers have been in litigation since October 2009, when Nokia filed a lawsuit accusing Cupertino, California-based Apple of infringing patents. The Finnish company also demanded royalties on the millions of iPhones sold since the device's introduction in 2007. Nokia said in March it has 46 patents asserted against Apple in civil lawsuits and complaints lodged with the U.S. International Trade Commission.
Nokia, Apple Reach Patent License Deal, Settle All Lawsuits
"Nokia emerges as a clear winner from the fight," Sami Sarkamies, analyst at Nordea Bank AB in Helsinki, said in a note to clients today. The initial payment will likely be in the range of hundreds of millions of euros related to about 200 million Apple devices delivered to date, Sarkamies said.
Nokia climbed as much as 17.6 cents to 4.47 euros and traded 2.1 percent higher at 4.39 euros as of 1:14 p.m. The stock has lost more than three quarters of its value since Apple introduced the iPhone in June 2007.
Freed Resources
"This frees up resources for both Apple and Nokia," said Florian Mueller, a Munich-based consultant and intellectual property activist. "Other companies whom Nokia will ask to pay royalties will have to think very hard whether to pay or pick a fight."
Nokia Chief Executive Officer Stephen Elop is readying a line of phones based on Microsoft Corp.'s Windows Phone 7 operating system to replace the company's own Symbian line, which is losing market share to Apple's iPhone and Android handsets based on Google Inc.'s Android system.
"We're glad to put this behind us and get back to focusing on our respective businesses," said Apple spokesman Steve Dowling.
Nokia wouldn't disclose the amount of the payments. Royalty agreements are generally secret, said Martin Nilsson, a Stockholm-based analyst with Handelsbanken.
Smartphone Growth
"Everybody pays license fees, that's how this industry has worked for 25 years, and now the setup with Apple isn't any different to what they have with the others," Nilsson said. "It's in line with expectations that they resolved it and that Nokia became a net recipient."
Nokia's first claims covered technology for wireless data, speech coding, security and encryption. Subsequent claims asserted rights to wiping gestures on a touchscreen and on- device application stores, both of which Nokia said it filed to patent more than 10 years before the iPhone launch.
The global market for smartphones is expected to grow 50 percent to $138 billion this year, Stuart Jeffrey and other Nomura analysts said in a report yesterday.
The Finnish company also broadened its claims to cover Apple's iPad and iPod Touch.
Nokia Licensees
Mobile-phone makers generally cross-license each other's patent portfolios with extra payments covering the differences in value. Apple countersued and both companies pursued parallel claims with the International Trade Commission.
"We've been talking to them since 2007, discussions have continued throughout the litigation and our goal has always been to stop Apple using our patents without paying for them," Nokia spokesman Mark Durrant said by phone.
Nokia has about 40 licensees for the standard-essential patent portfolio, including Apple, Durrant said. All actions between the two companies including Apple's suits against Nokia and conflicts at the International Trade Commission have been dropped, he said.
"Our understanding is that the dispute was never really about Nokia's essential patents," such as those relating to GSM and 3G wireless technologies, Sarkamies said. "Rather they were used to arm-wrestle a solution on non-essential patents such as touchscreen user interface innovations."
To contact the reporter responsible for this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net
To contact the editors responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net .
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