Nokia, Qualcomm settle their feud

Elliot Spagat/BusinessWeek
25 Jul 2008

Nokia Corp. and Qualcomm Inc. said Wednesday they agreed to settle a high-stakes licensing dispute and end a bitter legal battle that has lasted nearly three years and spanned several continents.

The wireless industry heavyweights said the 15-year licensing deal gives Nokia rights to a wide portfolio of Qualcomm's patents. Terms were not disclosed.

Nokia, the world's largest handset maker, said it will withdraw its antitrust complaint against Qualcomm at the European Commission. Nokia filed the complaint in October 2005 with five other companies, which led to a flurry of lawsuits between Qualcomm and its rivals and several regulatory probes into Qualcomm's licensing practices.

The agreement, announced after markets closed, thrilled Qualcomm investors. The company's shares soared 18.7 percent, or $8.38, to $53.20 after hours. During regular trading, its shares rose 1.6 percent, or 72 cents, to $44.82 on the Nasdaq Stock Market.

U.S. traded shares of Espoo, Finland-based Nokia fell 0.3 percent, or 7 cents, to $26.70 in regular-session trading on the New York Stock Exchange, then added 31 cents after hours.

The stakes were especially high for San Diego-based Qualcomm, the world's largest maker of chips for cell phones. It gets about two-thirds of its profits from licensing fees on its patents. Nearly all the rest of its profit comes from making chips.

The agreement was announced after a judge in Wilmington, Del., delayed the opening day of a trial to address the licensing fees and Nokia's complaint that Qualcomm has ignored its commitment to license its patents on fair terms.

It also came after Qualcomm delayed the release of its fiscal third-quarter results by one day, until Thursday, without explanation, sparking a rally on speculation that a settlement was imminent.

A licensing agreement between the two companies expired in April 2007. The new pact covers a host of technologies that didn't exist or were in their infancies when the two companies signed their initial agreement in 1992 and renewed it in 2001.

Neither company said much about the likely financial impact.

'The positive financial impact of this agreement is within Nokia's original expectations and fully reflects our leading intellectual property and market positions,' said Olli-Pekka Kallasvuo, Nokia's chief executive officer.

Paul Jacobs, Qualcomm's chief executive officer said, 'The terms of the new license agreement, including the financial and other value provided to Qualcomm, reflect our strong intellectual property position across many current and future generation technologies.'

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