After eight years, Apple (AAPL +1.38%) and Nokia (NOK +11.69%) finally agreed to bury the hatchet. In a joint press release posted early Tuesday morning, the two mobile titans announced the end of all litigation between them.
A brief history of Nokia vs. Apple
Nokia was the undisputed leader of cell phone sales on a global level, back in the day when music-playing features and built-in cameras counted as high-end touches.
Apple changed all of that in 2007 with the launch of the original iPhone. The game-changing device immediately started cutting into Nokia's then-dominant market share. The Finnish company filed its first patent suit against Apple in the fall of 2009, alleging that the iPhone was implementing Nokia's wireless networking technologies without paying the proper licensing fees.
This was the start of a long and occasionally intense legal battle, fought on a global scale. Both companies fired fresh volleys as recently as December 2016.
Image source: Getty Images.
And now, the war is over
The settlement of all legal actions between Nokia and Apple includes a multiyear general patent license deal as well as cash payments from Apple to Nokia.
Keep an eye out for Nokia's next couple of earnings reports to get a sense of the size of these payments, since the companies declined to reveal those details in their press materials. The checks will be large enough that Nokia promised to update its capital structure plans along with its third-quarter report. Nokia should have that document ready by late October or early November.
Moreover, Apple will sell Nokia-branded digital health products in its retail and online stores, and the two companies are partnering to create new digital health products going forward.
Maria Varsellona, Nokia's chief legal officer, called the settlement "meaningful" for both companies. "It moves our relationship with Apple from being adversaries in court to business partners working for the benefit of our customers," Varsellona said in a prepared statement.
What's next?
Nokia stopped making phones in 2014, when the entire handset division was sold to Microsoft (MSFT 0.63%) in a $7.2 billion deal. Since then, the company has focused on wireless infrastructure products and services. Microsoft later sold the branding rights for Nokia phones back to a Finnish company run by former Nokia executives, recording a $7.6 billion goodwill writedown in the process.
But Nokia held on to its portfolio of mobile technology patents, which explains why Nokia is the company slated to receive Apple's license payments.
So Nokia walks away with a new licensing revenue stream of unknown dimensions and the opportunity to win more partnering opportunities with its longtime enemy in Cupertino.
Apple is winding down its sprawling web of legal disputes, leaving the company room to refocus on innovation instead of litigation.
