Apple and Nokia announced a surprise settlement in their latest patent-infringement battle, a move that appears to pave the way for Apple to refocus its patent lawyers against Qualcomm.
Specifically, Nokia and Apple announced they settled “all litigation related to their intellectual property dispute and agreed a multiyear patent license.” Under the agreement, Apple said it will make a payment to Nokia as well as “additional revenues during the term of the agreement.”
As is standard in most patent-licensing arrangements, terms of the deal were not disclosed.
Interestingly, the new agreement also calls for Apple to purchase “certain network infrastructure product and services” from Nokia. Apple will resume carrying Nokia’s digital health products (formerly under the Withings brand) in Apple’s stores. “And Apple and Nokia are exploring future collaboration in digital health initiatives,” the companies said.
“This agreement will strengthen our collaboration,” Basil Alwan, president of Nokia’s IP/Optical Networks business, said in a release. “We look forward to supporting Apple.”
The settlement comes as a surprise considering Nokia just six months ago filed complaints against Apple in the U.S. and 10 other countries, claiming the iPhone vendor was infringing 40 of its patents.
“The timing is surprising as resolution from the cases was unlikely until Q4 at the earliest,” the analysts at Wall Street investment research firm Wells Fargo wrote in a note to investors immediately after Nokia and Apple’s announcement this morning. “This suggests to us that NOK received a rate it was satisfied with without having to gain leverage against AAPL. … While the lifting of the litigation overhang is positive for both companies, from a financial perspective, we see this as a bigger positive for NOK while Apple should see some pressure on gross margins (though the EPS impact is small).”
The action paves the way for Apple to focus its courtroom energies on Qualcomm; Apple filed a $1 billion lawsuit against Qualcomm over royalty payments, claiming the venerable chip manufacturer insisted on onerous royalties for its technologies and demanded royalties for technologies it didn’t develop, such as Apple’s Touch ID. Apple claimed that it “has been overcharged billions of dollars on Qualcomm’s illegal scheme,” though the suit seeks damages of just under $1 billion.
Not surprisingly, Qualcomm filed a countersuit against Apple, claiming among other things that the iPhone vendor “breached” and “mischaracterized” agreements with the chipmaker and interfered in deals with Qualcomm licensees.
And just last week Qualcomm escalated the battle by suing the four companies Apple uses to make iPhones and iPads—Foxconn, Pegatron, Wistron and Compal—for failing to provide royalty payments after they received instructions from Apple not to pay.
To be clear, patent-infringement battles are relatively commonplace in the wireless and wider tech industries as companies work to make money from their inventions while also leveraging the work of others. Indeed, this isn’t even the first settlement between Apple and Nokia: Nokia sued Apple in 2009 and the companies reached a settlement in that fight in 2011.