Nokia and InterDigital agreed to drop patent claim cases in the British courts sending the mobile technology firm's stock up 7%, a Reuters report said.
The lawsuits relate to certain 3G mobile phone technology patents owned by the companies and whether they were essential to the UMTS 3G telephony standard, InterDigital said in a statement.
The companies, which had been locked in the patents battle in the English courts for the past few years, are, however, still slugging it out in the US, the Reuters report added.
The two companies did not give any financial details of the settlement.
In July 2005, Nokia filed a complaint asking the High Court in London to declare that 31 European patents of InterDigital were not essential to the UMTS mobile technology standards.
In December 2006, InterDigital sued Nokia in the English High Court on UMTS 3G standard.
InterDigital also filed a complaint with the US International Trade Commission in August 2007, saying that Nokia was engaged in unfair trade practice involving two InterDigital patents related to certain 3G handsets and components.