Apple (NASDAQ:AAPL) and Nokia (NYSE:NOK) have reached a new patent license agreement and have signed a new business deal, ending its legal battle. Nokia’s Chief Legal Officer Maria Varsellona said, “(The agreement) moves our relationship with Apple from being adversaries in court to business partners.” The relatively quick resolution to the dispute surprised many. Analysts had feared a protracted legal dispute.
The patent dispute was announced in December, with Apple complaining of being overcharged on licensing fees. After the case was filed, Apple said it would no longer pay Nokia royalties on technology used in products like iPhone. In return, Nokia accused Apple of violating 32 of its technology patents. Nokia also sought to block U.S. imports of devices allegedly infringing on its patents.
Patent royalties are highly profitable for Nokia. Nokia was once the world’s dominant cellphone maker. In 2014, the company sold its handset business to Microsoft to focus on its network business and licensing its large portfolio of mobile device patents. Nokia’s patents cover technology that is imperative to the efficient operation of smartphones.
As part of the new agreement, Apple agreed to a multi-year license on Nokia’s intellectual property. Nokia will receive an upfront cash payment and additional revenues from Apple starting with the current quarter. The exact details of the agreement remain confidential. Nokia said it will follow its existing practices for disclosing patent licensing revenue in its quarterly announcements.
As part of the new business deal, Apple will resume carrying Nokia’s digital health products in its retail and online stores while Nokia will provide network products and services to Apple. Apple Chief Operating Officer Jeff Williams said, “We are pleased with this resolution of our dispute and we look forward to expanding our business relationship with Nokia.” The companies said they also are exploring future collaboration on digital health initiatives. Apple and Nokia also plan to hold regular summits between company executives.
More than 90 percent of Nokia’s overall revenue comes from telecoms network equipment. Nokia aims to expand its sales of network equipment sales to global internet and technology giants in the future. However, the network business is currently suffering an industry-wide slump, making its patent royalties even more important to the company’s bottom line.