Apple will pay Nokia an unspecified one-time payment and on-going patent royalties as the two companies settled all outstanding litigation between them.
In a statement, Nokia said that Apple will become a licensee. The financial structure of the deal wasn't disclosed, but Apple and Nokia closed their complaints with the U.S. International Trade Commission. Nokia filed lawsuits against Apple over intellectual property throughout 2010.
Nokia CEO Stephen Elop said:
"We are very pleased to have Apple join the growing number of Nokia licensees. This settlement demonstrates Nokia's industry leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market."
For Nokia, the Apple patent win is a small victory. Clearly, Nokia wants to be more than a patent licensing company to become a leading smartphone player again. Nokia is transitioning to Windows Phone 7 and losing market share at a rapid clip.
Nokia said the Apple patent payment will have a "positive financial impact" on its second quarter results. Nokia recently issued a profit warning.
What remains to be seen is whether the Apple-Nokia patent truce leads to other settlements. Patent lawsuits have been flying in the wireless industry. Kodak recently won a patent skirmish against Apple.
As for Nokia, it's likely that the Apple win will allow it to monetize its patent portfolio going forward.
Patent lawsuit tracker Florian Mueller said:
Nokia doesn't have any litigation worries at the moment, but part of its new strategy is to ratchet up the monetization of its patent portfolio. Having proven its ability to defeat Apple -- after the most bitterly contest patent dispute that this industry has seen to date -- is a clear proof of concept. Other companies whom Nokia will ask to pay royalties will have to think very hard whether to pay or pick a fight.
This is also very significant with a view to Android. Given that Android is in many ways a rip-off of Apple's operating software, Android-based devices are highly likely to infringe on largely the same Nokia patents that Apple now felt forced to pay for.