Legal News

Nokia, Qualcomm Lay Down Their Swords, Settle Before Trial

By Dan Slater

On the day trial was to begin between Qualcomm and Nokia, the companies settled, signing a 15-year agreement that includes Nokia making an up-front payment as well as on-going royalties to Qualcomm. Financial details are otherwise undisclosed. Here’s the WSJ report.

The litigation goes back to April of last year, when, after their previous licensing agreement expired, the two companies exchanged lawsuits.

Nokia, the Finnish cell phone maker, claimed it should pay a lower royalty rate to the San Diego-based company because, over time, it had acquired many patents of its own that could be used to offset those of Qualcomm, which makes more than half of its profit from licensing its patents. Cellphone makers typically pay Qualcomm close to 5% of the price of a handset.

“This is a landmark deal,” Timothy Luke, an analyst at Lehman Brothers, told the WSJ. “This removes a ton of uncertainty from the industry.” He said the initial payment to Qualcomm is likely to be hundreds of millions of dollars, and he estimates that Nokia would have owed Qualcomm about $600 million in 2008 alone under royalty rates it paid under the prior agreement.

Repping Qualcomm were Cooley Godward’s Steven Strauss and Cravath’s Evan Chesler. Heading Nokia’s team: Quinn Emanuel’s Charles Verhoeven and William Urquhart.

Full post as published by Law Blog - WSJ.com on July 24, 2008 (boomark / email).