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Last updated: June 14, 2011 8:32 pm

Nokia wins Apple phone patent case

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The deal is a rare piece of good news for Nokia after a torrid period of declining market share

Apple will pay Nokia hundreds of millions of dollars in compensation for intellectual property used in its iPhone, handing a rare victory to the troubled Finnish handset maker over its US rival.

The settlement ends a long-running legal dispute between the companies that saw each side accuse the other of stealing smartphone technology.

Apple has agreed to pay a one-off sum to Nokia followed by ongoing royalty payments.

No financial details were given but analysts estimated the initial payment could be worth between $300m and $600m to cover the 111m iPhones sold since its launch in 2007. Ongoing royalty payments could also be worth hundreds of millions a year to Nokia if iPhone sales continue their rapid growth.

Apple stressed it was a cross-licensing agreement that also took account of its own patent claims against Nokia and insisted it did not include “the majority of the innovations that make the iPhone unique”. But analysts said the net gain for Nokia indicated the Finnish group had emerged as the strong winner.

The deal promised to provide some relief for Nokia amid a torrid period of rapid market share decline and strategic upheaval as it struggles to compete with the iPhone and devices using Google’s Android.

The dispute had been the most high-profile in a series of legal battles between technology companies over the intellectual property behind smartphones and tablet computers. In addition to Nokia, Apple has also been in disputes with Motorola of the US and HTC of Taiwan.

Stephen Elop, Nokia chief executive, hinted that he saw further potential to extract revenues from the group’s patent portfolio, increasing speculation over a possible challenge against Android handset makers, such as Samsung and HTC.

“This settlement demonstrates Nokia’s industry leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market,” he said.

Rob Enderle, US technology analyst with Enderle Group, said a peace deal could clear the way for Apple and Nokia to launch a co-ordinated legal assault on Google and its Android partners, with additional backing from Microsoft, which forged a strategic alliance to develop smartphones with Nokia.

“We may have seen the world suddenly become far more hostile to Google as Apple, Microsoft and Nokia start to align collectively against a company they all feel is stealing its way to the top,” he said.

Analysts expect to learn more details of the Apple payments when Nokia announces second-quarter earnings next month. Nokia last month issued a profit warning because of declining market share and lower prices.

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