In late 2009, cell phone manufacturer Nokia filed a claim against Apple claiming that the iPhone infringed on ten of Nokia’s patents. Over time, countersuits between the two companies expanded the disputed claims to 75 different patents in multiple countries.
Well, the nearly two year long legal tug-of-war has finally ended – with Nokia coming out the victor. Apple will pay an undisclosed lump sum, plus ongoing royalties as part of the licensing agreement for the Nokia patents they’re utilizing in the iPhone.
However, this may not be as big a blow to Apple as it initially appears. Aside from the obvious fact that Apple’s legal resources are now freed up for other patent litigation issues, there is one other concept that’s now in play: a legal precedent has been set, which means Nokia may be able pursue other targets.
Many Android-based phones may become the focus the same question: “Does phone XXX infringe on Nokia’s patents?” Considering that few, if any, of those manufacturers have quite as deep pockets as Apple does, this could be a huge blow to the Android platform, should Nokia pursue similar litigation. It will be interesting to find out if this settlement, in turn, may wind up helping Apple over time.
First of all, Apple was already going to pay Nokia for a license to its patents.
The problem was that Nokia wanted to jack up the price to gouge Apple – wanting to charge Apple more than it charges other companies for the license. Apple, of course, balked at this idea, and refused to pay the higher license fee.
This lead to litigation between Nokia and Apple.
What happened is that Nokia backed off its higher price demands from Apple. Then both quickly settled the lawsuits. This led Apple to paying a standard patent royalty fee to Nokia with back payments.
Thus, both Apple and Nokia are fine.
But Apple’s competitors are not fine. In fact, they should be running scared. Unlike Apple, which has a huge profit from its products, Apple’s competitors, like Motorola, have slim profit margins. Thus, paying for Nokia’s patents can dry up their profits, taking them closer to bankruptcy.
Thus, in whole, Apple paid for Nokia’s patents at the price it wanted. And Apple gets an edge on the competitions, which stands to lose profits from having to license Nokia’s patents.