Analyst: Timing of Nokia settlement suggests ‘favorable outcome’ for Apple

“Though Apple will pay Nokia a one-time sum and ongoing royalties as a result of their new settlement, one analyst believes the timing of the agreement suggests Apple was able to negotiate a favorable outcome,’ Neil Hughes reports for AppleInsider.

“Analyst Shaw Wu with UBS Investment Research believes Apple may have been in a favorable position in negotiations with Nokia because of a ruling in the iPhone maker’s favor made by the U.S. International Trade Commission in March,” Hughes reports. “That early victory may have allowed Apple to reach a better royalty agreement with Nokia than the Cupertino, Calif., company had expected.”

Hughes reports, “[Um] believes Apple’s one-time payment to Nokia probably amounts to several hundred million dollars… The firm has maintained its ‘buy’ rating for AAPL stock, and reiterated a 12-month price target of $510.”

Read more in the full article here.

Jordan Golson reports for MacRumors, “Deutsche Bank analyst Kai Korschelt today estimated that Nokia will be receiving on the order of a 420 million euro ($608 million) lump-sum payment from Apple as part of a patent litigation settlement between the two companies.”

“The estimate, based on previous patent-related settlements in the industry, assumes a 1 percent royalty rate on all iPhones sold through the first quarter — 110 million phones at an average selling price of $550,” Golson reports. “Korschelt also says that Apple would likely send Nokia recurring revenue payments covering future iPhone sales at the same rate, payments that would come in at around 95 million euros ($137.6 million) per quarter based on current sales, to cover ongoing licensing.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]

Related articles:
Nokia enters into patent license agreement with Apple – June 14, 2011
Apple overtakes Nokia as world’s largest vendor of mobile handsets by revenue – April 21, 2011
U.S. ITC: Apple did not infringe Nokia patents – March 25, 2011
Apple sues Nokia in UK over touchscreen scrolling patent infringement – January 20, 2011
Not so fast: ITC staff shot down four patents in Apple vs. Nokia case, but 24 remain – November 4, 2010
Apple files patent-infringement lawsuit against Nokia in UK – September 28, 2010
Delaware judge puts Nokia-Apple patent fight on hold pending resolution of ITC claims – March 3, 2010
Nokia asks court to bar Apple’s imports of Macs, iPhones, iPods into U.S. – January 5, 2010
Nokia requests U.S. ITC investigation into Apple patent infringement – December 29, 2009
In countersuit, Apple says Nokia missed paradigm shift and therefore ‘chose to copy the iPhone’ – December 11, 2009
Apple countersues Nokia – December 11, 2009
Nokia’s lawsuit against Apple over iPhone likely a negotiating tactic over licensing fees – October 26, 2009
Nokia sues Apple claiming iPhone infringement of Nokia GSM, UMTS and WLAN patents – October 22, 2009


  1. Nokia’s biggest concern has to be that Apple does not find a legal way (different approach/technology) of performing the same functions that are covered by the patents/licensing. If Apple is paying too much going forward, they have all sorts of incentives to develop alternatives and thus cut off payments to Nokia. Keep the licensing low enough in cost and Apple spends their time on other things. Can be a fine line.

    1. Nothing to do with “copying”. Nokia initially demanded ridiculously disproportional, anticompetitive fees for its patents. Apple declined to pay anything intentionally, to make Nokia sue and drag the company through endless trials that can go almost forever.

      Since Nokia needs money and understands that Apple will not cede its position, they probably did not have much else to do other than offer fairly valued license fees — what Apple wanted from very beginning.

    2. Nokia owns considerable patents and licenses them to other phone makers at a normal and fair price. (There is a legal arm that “tries” to regulate licensing at “fair” pricing.) Apple went to Nokia for the fair and reasonable licensing fees that were being charged other companies. Nokia wanted triple the fees from Apple for the same license. Apple balked and waited for a lawsuit to get decent and fair prices.

    3. The short(ish) story is:
      Nokia held some wireless (cell) communications patents relating to GSM to make GSM a world standard Nokia had agreed to license these at a “flat rate” to all manuf. so there would be a international GSM standard (which includes some Nokia patented tech)
      Except (as the story goes) Nokia wanted more from apple than it’s standard licensing fees, it also wanted access to some of apple patents (which are NOT agreed standards)
      and Apple just wanted to pay what other’s pay for the GSM license. And so a dispute arose whether Nokia could require “extras” from any company (in this case apple) for patent tech that it agreed would constitute a part of an “industry standard” (in this case GSM)

      I think Nokia was in the wrong but was desperate (could finally see the writing on the wall) The recent ruling (in apple’s favor) and their decision to dump their own OS and just license WinMo from MS left them little need or opportunity to cross license apple’s touch patents, so they and apple likely “settled” for the standard GSM licensing fees (collected from all GSM users, which is what apple wanted all along and in truth was all Nokia was entitled to)

      1. I was trying to find first-hand info that Nokia wanted more from Apple than anyone else but couldn’t. Every article I saw to that effect was hearsay. Do you have any links?

        And yes, for Apple, with $50 billion in the bank, this was a mere pinprick, even if the $600 million figure is true. Remember when Creative “won” their suit against the iPod?

  2. @ tesselator

    That’s a good summary of the situation, and I agree with your reasoning that Apple “settled” for the same terms tha Nokia asks everyone else. Nokia were trying to pressure Apple into cross-licensing patents that Nokia wanted, which to my mind were far more important to them than the jacked-up licensing fees.

    Apple possibly wound up what they were willing to pay in the first place, and still kept their patents out of Nokia’s hands, so while Nokia gets a wad of cash, they didn’t get more than they were entitled to, so this could be viewed as a defeat for Nokia.

    Who should be shitting their pants is Google, because this could have serious consequences for Android. Much of the iPhone’s capabilities were shamelessly ripped off by Android, and one can only assume that many of these capabilities will violate the
    Nokia patents.

    The fact that Apple paid up is bad news to Android, because it gives Nokia legal precedent to use as ammunition against Google, and they could hurt them in one of two ways. I don’t know if Google has indemnified manufacturers against patent lawsuits. If they have, then they’re on the hook for a huge sum of money, and they don’t make any money off Android. If they haven’t, and Nokia goes after individual manufacturers, this could cause many handset makers to think twice about going with Android, especially if Microsoft plays knight in shining armor and offers Windows Phone 7 licenses under better terms.

    Given Microsoft’s big bet on their bedmate Nokia, Redmond could deal Android a serious blow while expanding their own presence in the mobile wars. Ballmer must be turning handsprings right about now.

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