Nokia Wins Patent Battle Versus Apple

Mobile giant Nokia (NYSE:NOK) has won a long-fought patent infringement suit against rival Apple Inc. (NASDAQ:AAPL) iPhone, iPod and iPad.

The Finnish company has signed a patent license deal with Apple, thereby ending all the pending patent litigations between the two companies.

Though the specific terms of the deal are confidential, Nokia said Apple would make a one-time payment and on-going royalties to the Finnish company.

We are very pleased to have Apple join the growing number of Nokia licensees, said Stephen Elop, president and chief executive officer of Nokia. This settlement demonstrates Nokia's industry leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market.

The deal, under which Nokia and Apple will withdraw their respective complaints to the US International Trade Commission (ITC), is expected to positively impact Nokia's recently revised outlook for the second quarter 2011 of around break-even operating margin for Devices & Services segment.

On March 29, Espoo, Finland-based Nokia had filed a complaint with the ITC, alleging that Apple infringed Nokia patents in virtually all of its mobile phones, portable music players, tablets and computers.

In the complaint, Nokia alleged that Apple has used its innovations to create key features in its products in the areas of multi-tasking operating systems, data synchronization, positioning, call quality and the use of Bluetooth accessories.

Nokia had 46 patents in suit against Apple, many filed more than 10 years before Apple made its first iPhone.

In addition, Nokia had also filed cases on the same patents and others in Delaware, US and has further cases proceeding in Mannheim, Dusseldorf and the Federal Patent Court in Germany, the UK High Court in London and the District Court of the Hague in the Netherlands, some of which would have come to trial in the next few months.

Nokia, which has spent about 43 billion euros in R&D in the last two decades, has over 10,000 patent families and has one of the wireless industry's strongest and broadest patent portfolios.

It may have made Apple admit its defeat in patent case, but that alone won't solve Nokia's problems.

The settlement comes as Nokia is forecasting a weak second quarter as the once-undisputed leader in mobile phones lost the initiative to smartphones like Apple's iPhone and devices based on Google's Android software. If Apple pays royalties, then it will be an additional revenue stream for Nokia as Apple devices were sold in millions.

Nokia is also losing the battle in the low end of the phone market, where it has been performing strongly, to cheaper Asian rivals, and recently it would miss sales and profit targets, hurt by tough competition in China and Europe.

No wonder, Nokia is expected to report a loss for this quarter and next as it cuts prices to try to prevent more customers defecting to rivals' smartphones, a Reuters poll found.

Analysts now expect the company to report a second-quarter loss of 0.04 euro per share and a loss of 0.05 euro for the third. They have also lowered their core EPS outlook for 2012 and 2013.