Nokia said on Tuesday that it had settled a two-year-old patent fight with Apple over smartphone technology through a licensing agreement that will commit Apple to make a one-time payment to the company and to pay regular royalties in the future.
The agreement settles all outstanding patent litigation between Apple, the leader in the smartphone market, and Nokia. The companies also agreed to withdraw complaints against each other with the International Trade Commission over the use of intellectual property.
“We are very pleased to have Apple join the growing number of Nokia licensees,” said Stephen Elop, the Nokia president and chief executive. “This settlement demonstrates Nokia’s industry-leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market.”
Nokia, which is based in Finland, did not disclose the financial terms of the settlement but said the agreement would have a “positive financial impact” on Nokia’s revised second-quarter results.
Nokia shares rose 15 cents, or 2.45 percent, to $6.26 in New York trading, after the announcement of the deal. Its shares had plunged on May 31, after Nokia revised its second-quarter sales and profit forecasts sharply lower, and abandoned its previously announced full-year targets for 2011 amid rising competition.
Apple described the agreement as limited in scope.
“Apple and Nokia have agreed to drop all of our current lawsuits and enter into a license covering some of each other’s patents, but not the majority of the innovation that makes the iPhone unique,” Apple said. “We are glad to put this behind us and get back to focusing on our respective businesses.”
Analysts said the financial impact on Apple was likely to be small.
“I don’t think it is material,” said Charles Wolf, an analyst with Needham & Company. Investors appeared to agree, sending Apple’s shares up about 1.8 percent, to $332.44.
Mr. Wolf said most of the Nokia patents appeared to cover highly technical internal components, which he described as the “plumbing” of mobile devices. The iPhone’s distinctive look and feel did not infringe on Nokia’s patents, he said. The mobile phone makers had been embroiled in more than 40 patent lawsuits in Germany, Britain and the United States since 2009 over basic technologies relating to a handset’s user interface, power management, antenna and camera.
Florian Mueller, an intellectual property analyst in Starnberg, Germany, said the announcement was a victory for Nokia, which in the first quarter ceded its long-held lead in global cellphone revenue to Apple. The iPhone is the world’s best-selling smartphone.
Mr. Mueller said while Apple benefited by settling its legal differences with Nokia, it was likely that the patent settlement with Apple involved “significant” payments by Apple to Nokia.
“I’m sure Nokia had to go down from its maximum demands because otherwise there wouldn’t have been a settlement,” Mr. Mueller said. “But the deal structure is very telling: A combination of a payment for past infringements as well as running royalties is a clear indication that there’s serious money in this for Nokia.”
Mr. Mueller said the agreement was the first fruit of a new Nokia strategy to more aggressively defend its patent portfolio, which includes more than 10,000 groups of handset patents developed over the past two decades. Nokia has said it invested more than 43 billion euros ($62 billion) to develop its patent archive.
“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. Mueller said. “Other companies whom Nokia will ask to pay royalties will have to think very hard whether to pay or pick a fight.”
Mr. Mueller said Nokia might now turn 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 was technologically similar to Apple’s iPhone operating system and might invite a legal challenge from Nokia.
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