Nokia wins legal battle against Apple

Apple and Nokia have been locked in a legal tussle since October 2009 over patents on mobile technology [Reuters]

The world’s leading mobile phone maker Nokia has notched up a rare victory against arch-rival Apple as the iPhone maker agreed to settle a long-running dispute over patents.

Nokia said on Tuesday that Apple had agreed to pay royalties for the use of Nokia technology in its devices, ending all of their 46 ongoing patent disputes.

Apple and Nokia have been locked in a legal tussle since October 2009, when Nokia sued Apple in the US, arguing the iPhone-maker was getting a “free ride” on technologies patented by Nokia.

“The financial structure of the agreement consists of a one-time payment payable by Apple and on-going royalties to be paid by Apple to Nokia for the term of the agreement,” Nokia said in a statement, adding that the details of the contract were confidential.

The deal constitutes a massive victory for Nokia and ends years of tit-for-tat suits filed by the two companies, with both agreeing to withdraw all complaints they had filed with the US International Trade Commission.

“We are very pleased to have Apple join the growing number of Nokia licensees… This settlement demonstrates Nokia’s industry leading patent portfolio,” Stephen Elop, the Nokia chief executive, said in the statement.

‘Positive news’

“This is the first positive news from Nokia for a long time. They can both focus on their businesses now, and the dispute was settled for Nokia’s advantage,” Mikael Rautanen, an analyst with Inderes, said.

Nokia, a Finnish company that has been struggling to maintain its position as global market leader, also said the deal should have “a positive financial impact” on its second-quarter performance.

An Apple spokesman confirmed the deal on Tuesday. “We’re glad to put this behind us and get back to focusing on our respective businesses,” he said.

Just two weeks ago, Nokia warned that its sales for the quarter would be far worse than previously expected and that it could no longer give a full-year forecast, sending its share price to its lowest level since early 1998.

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

Nokia, which has said it will be more aggressive in licensing its patents, indicated that further legal battles were ahead.

“This settlement …. enables us to focus on further licensing opportunities in the mobile communications market,” CEO Elop said in a statement.

Analysts said makers of Google Android phones were the next likely target.

“Emerging victorious from such a war, Nokia is in a strong position to collect royalties from other industry players, particularly from makers of Android-based devices,” Mueller said.

However, analysts warned the company still had a long way to go towards any recovery.

“This (the Apple deal) could cause the stock to have a bit of a relief rally today, but does very little to address the stark reality that the company is facing,” Richard Windsor, an analyst at Nomura, said.

“Hence we see no reason to remain anything other than negative on the stock.”

Technical analysts said Nokia shares had been in oversold territory since late May and momentum indicators had been signalling that it was ripe for at least a short-term, technical rebound.