A legal battle between tech behemoths Apple and Nokia has finally drawn to a close after more than eight years.
For the past five years, Apple has paid Nokia a limited royalty for the use of its patents as part of a corporate pact. The initial dispute mainly involved Nokia wanting Apple to keep paying for that portfolio, while also demanding that Apple license additional patents even though the pact expired on December 31st last year. Apple refused to pay Nokia's price and had accused it of extortion.
In 2016, Apple filed an antitrust lawsuit against third party companies called PAE's, arguing that Nokia had already agreed to license its patents under reasonable terms. However, Nokia transferred these patents to PAE's instead, which Apple described as "anticompetitive behavior" and an attempt at extortion.
In retaliation, Nokia filed lawsuits in 11 countries, including Germany and the United States, attempting to defend its intellectual property. Nokia said that Apple should pay for their technology, which is used in smartphones, tablets and other Apple devices.
Yet, tensions have eased since the signing of a new patent agreement between the two companies on Tuesday. As per this settlement, Apple will begin paying royalties to Nokia starting from the second quarter of this year. While the financial terms of the agreement have not been completely disclosed, new business terms dictate the stocking of Nokia's new digital health products in Apple stores in exchange for the provision of mobile network infrastructure products and services.
"We are pleased with this resolution of our dispute and we look forward to expanding our business relationship with Nokia," Jeff Williams, Apple's chief operating officer, said in a statement.
Because legal spats among corporations signal instability and uncertainty, the settlement has inevitably affected investors positively by removing these insecurities, driving Nokia's stock price up by more than 6%. Canaccord Genuity Analyst T. Michael Walkley raised his target stock price for Nokia from $5.50 to $7.00.
In addition to generating more revenue from the royalties that they will be paid, Nokia also can eliminate the $112.1 million in annual legal costs it was incurring. Moreover, Nokia's sales prospects are expected to also increase with the added exposure of its new product line in Apple stores. Most importantly however, is the symbolic significance of this settlement: Nokia has proven that it is position in the industry is still well established and critical, despite losing a considerable amount of its market share and brand value in the mobile-tech space over the past few years.
Furthermore, in befriending its strongest competitor, Nokia has not only resolved any existing disputes, but has also paved the path for the possibility of more business deals including joint products, campaigns, sharing of technology and the complete re-imagination and revamping of its brand image by association with the more contemporary and prevalent brand Apple.
Considering that Apple is still currently embroiled in legal turmoil with Qualcomm, a micro-processing giant, it does not have the same ability to eliminate legal fees and focus its energies into growth like Nokia does.
That being said, as a leader in the market and household name, Apple continues to maintain investor faith that is bolstered by its growing sales and innovation. The question is, given the legal complications and its precarious position as a strong competitor sought after by its contemporaries, will Apple be able to keep up with everything?
- https://www.nytimes.com/2017/05/23/business/apple-nokia-patents.html?ref=business
- https://www.nytimes.com/2016/12/22/technology/apple-nokia-patent-smartphone.html
- http://www.marketwatch.com/story/nokias-stock-jumps-to-16-month-high-after-settlement-deal-with-apple-2017-05-23
- https://www.theverge.com/2016/12/21/14043260/apple-nokia-patent-infringement-lawsuit-smartphone
