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How Much Did It Cost RIM to Pay Off Nokia?

By Evan Niu, CFA - Dec 28, 2012 at 6:00PM

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One struggling smartphone maker pays another to go away.

About a month ago, Nokia (NOK 0.00%) filed suit against Research In Motion (BB 0.59%) related to the BlackBerry maker's use of WLAN technologies in Wi-Fi capable devices. Way back in 2003, the pair had entered into a cross-licensing agreement that included Nokia's standards-essential patents but the Finnish company argued that the Canadian company had gone too far.

A Swedish arbitration court sided with Nokia and said Research In Motion wasn't able to keep selling WLAN smartphones until it paid up royalties. At the time, the two hadn't inked terms but Research In Motion was still peddling its wares anyway, hence the breach of contract suit launched by Nokia. Just days ago, Nokia and Research In Motion said they had settled the Wi-Fi patent dispute and entered into a new patent license agreement, in which case Nokia would drop all of its pending actions in three different countries.

All Nokia said was that the deal involved a one-time payment as well as ongoing royalties, without elaborating beyond that. Well, now investors know.

Thanks to Research In Motion's most recent 6-K filing, the BlackBerry maker said the deal includes a lump sum payment of 50 million euros, or about $65 million. That figure was already factored in to its fiscal third quarter earnings, which included a bottom-line profit of just $9 million. At least Research In Motion was able to increase its cash positions by $600 million throughout the quarter to $2.9 billion.

There's no disclosure of how much Research In Motion may be paying Nokia in royalties, but at least Research In Motion was able to pay Nokia to go away. Both companies have more important things to focus their respective efforts on: their turnarounds.

Fool contributor Evan Niu, CFA, has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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