Apple Settles With Nokia As Qualcomm Dispute Escalates

Apple AAPL has agreed to pay Nokia NOK an undisclosed amount as back payment and license its standard essential patents for the future to settle all legal disputes between the two.

The settlement came around five months after the companies sued each other. As in the case of most standard essential technology, Nokia sued Apple for infringing 32 patents covering "display, user interface, software, antenna, chipsets, and video coding" technologies with Apple counter suing, saying that Nokia wasn’t agreeing to a fair and reasonable rate.

The dispute started after their earlier licensing agreement expired and as Nokia also further fortified its technology portfolio with even more patents from its acquisition of Alcatel-Lucent. Nokia generates most of its revenues from telecom infrastructure but that market hasn’t been too hot lately. So the company may need its licensing revenue more.

The quick settlement isn’t the way Apple normally goes about these things, so the decision may have been prompted by its on-going and very bitter litigations with Qualcomm QCOM, another owner of a significant number of standard essential patents.

Apple has charged Qualcomm with anti-competitive behavior for forcing it to use its technology to the exclusion of all others. Apple has also said that Qualcomm withheld a billion dollars in rebates after Apple testified against it in an Indonesian court that resulted in a hefty fine.

Apple doesn’t use Qualcomm technology directly but through its manufacturing partners. So in retaliation, it asked its manufacturing partners Foxconn, Pegatron, Wistron and Compal Electronics to stop paying Qualcomm and agreed to indemnify them if it took them to court.

At the bottom of all this is a dispute about what is a fair and reasonable licensing rate. Qualcomm says Apple doesn’t want to pay for its technology while Apple says Qualcomm won’t agree to what it considers fair and reasonable.

 

All three companies carry a Zacks Rank #3 Hold.

But you could instead go for Stamps.com STMP, DST Systems DST or Rockwell Automation ROK, which are buy-rated technology stocks. Moreover, STMP topped estimates in each of the last four quarters and its estimates for fiscal year 2017 are also on the rise. Ditto for DST and ROK.

Not convinced? Check out the complete list of today’s Zacks #1 Rank stocks here.

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