The dispute that
started in Oct. 2009 when Nokia claimed that the iPhone was infringing on 10
patents Nokia holds on the integration of GSM, UMTS and wireless LAN, grew
through suit and countersuit to the point where it covered a total of 75
patents in seven different legal venues, from Delaware to Dusseldorf. The settlement of its epic 20-month patent
dispute with Apple (AAPL) that Nokia (NOK) announced early Tuesday could spell
trouble for the makers of Android phones.
settlement of this issue is not surprising nor is it surprising Apple is paying
Nokia for the use of its patents. All along this issue has not been whether or
not Apple would pay Nokia, but the rate that Nokia wanted Apple to pay for the
use of the company's patents.
I don't see this outcome (from the little known about the settlement) as either
a loss for Apple or a gain for Nokia. I suspect the two companies arrived at
royalty rates similar to terms arranged with other device makers licensing the
same intellectual property.
There's no question Apple lost the legal battle that
pitted its significant intellectual property holdings against Nokia's even
deeper patent portfolio. The terms of the settlement were not disclosed, but
they require Apple to make a one-time payment and ongoing royalties large
enough to materially improve Nokia's earnings for the quarter. Nokia's stock
was up 3% in European trading.
Mueller says Nokia's next target is likely to be the cell
phone manufacturers that have hitched their smart phone strategies on Google's
software. "Given that Android is in many ways a rip-off of Apple's
operating software," he writes, "Android-based devices is highly
likely to infringe on largely the same Nokia patents that Apple now felt forced
to pay for." In prepared statements, Nokia declared victory and Apple
settlement will most likely not have a big impact on either the iPhone's
margins or Apple's financial performance. A settlement of the dispute had been
widely expected by many of us who actively follow the company. It's also
possible Apple has already reserved for much of the initial payment