Skip Links

Apple surrenders to Nokia in patent fight, others may follow

Settlement seen as emboldening Nokia to pursue others, perhaps Google

By Paul McNamara on Tue, 06/14/11 - 6:23am.

Having succeeded in getting Apple to knuckle under to its patent portfolio, Nokia is now in position to wield that power against other phone manufacturers, say the struggling Finnish company and industry experts, at least one of whom believes Google may be next on Nokia's target list.

Nokia announced early this morning that it had reached a settlement with Apple that will see the iPhone maker pay both a one-time fee and ongoing royalties to end several years of back-and-forth patent lawsuits and complaints to the U.S. International Trade Commission. Terms of the agreement were not revealed.

(2011's 25 Geekiest 25th Anniversaries)

From a decidedly giddy Nokia press release:

"We are very pleased to have Apple join the growing number of Nokia licensees," said Stephen Elop, president and chief executive officer of Nokia. "This settlement demonstrates Nokia's industry leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market."

Apple's canned statement issued to media outlets appears defensive by contrast:

"Apple and Nokia have agreed to drop all of our current lawsuits and enter into a license covering some of each others' patents, but not the majority of the innovations that make the iPhone unique," the company said. "We're glad to put this behind us and get back to focusing on our respective businesses."

The New York Times spoke with Florian Muller, an intellectual property expert from Germany, who said the settlement will send a message to the industry:

"Having proven its ability to defeat Apple after the most bitterly contested patent dispute that this industry has seen to date is clear proof of" the effectiveness of Nokia's more aggressive strategy, Mr. Müller said. "Other companies whom Nokia will ask to pay royalties will have to think very hard whether to pay or pick a fight."

Mr. Müller said Nokia may now set its sights on Google, the maker of the Android open-source phone operating system, which is the world's fastest growing mobile operating system. Mr. Mueller asserted that Android is technologically similar to the iPhone operating system and may invite a legal challenge from Nokia.

While terms of the settlement were not revealed, one analyst told The Financial Times that it could be in the range of 1 to 2 percent of the $600 cost of an iPhone, which could mean a haul of up to $162 million per quarter for Nokia. Others pegged the likely settlement figure at less.

Either way, Nokia has a long way to go on its road to better financial fortunes, Richard Windsor, a technology specialist at Nomura, told The Financial Times. "This 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," he added. "Hence we see no reason to remain anything other than negative on the stock."

Nokia's stock was up about 3 percent in European markets.

(Update: Bloomberg quotes Stockholm-based analyst Martin Nilsson as seeing less here than may meet the eye: "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.")

Welcome regulars and passersby. Here are a few more recent buzzblog items. And, if you’d like to receive Buzzblog via e-mail newsletter, here’s where to sign up. Follow me on Twitter here.