Qualcomm: Patent Settlement with Nokia

Includes: NOK, QCOM
by: Eric Savitz

Qualcomm (NASDAQ:QCOM) and Nokia (NYSE:NOK) late Wednesday said they have settled all patent litigation between the two companies and reached a new 15-year licensing agreement. The agreement lifts a huge cloud from Qualcomm, and the stock has jumped dramatically in response.

The deal covers a veritable alphabet soup of wireless networking standards, including GSM, EDGE, CDMA, WCDMA, HSDPA, OFDM, WiMAX, LTE and other technologies.

Under the terms of the deal, Nokia gets a license for all Qualcomm’s patents for use in Nokia mobile devices and Nokia Siemens Networks infrastructure equipment. Nokia also agrees not to use any of its patents directly against Qualcomm, allowing Qualcomm to integrate Nokia technology into its chipsets.

Specific terms of the settlement were not disclosed, although the companies did say that NOK will make an upfront payment as well as ongoing royalties. Nokia has also agreed to assign ownership of a number of patents to Qualcomm, including “patents declared as essential” to the WCDMA, GSM and OFDMA standards.

Nokia CEO Olli-Pekka Kallasvuo said in a statement that “the positive financial impact of this agreement is within Nokia’s original expectations.”

Qualcomm CEO Paul Jacobs said that “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.”

Announcement of the agreement, despite the lack of specific terms, lifts a burden from the shares of both companies, each of which was spending a fortune on litigation in multiple jurisdictions. The announcement follows the delay earlier today of the expected start of what would have been a key court case between the two companies in Delaware - in retrospect, a big honking clue that something was up - and the postponement of Qualcomm’s earnings release and conference call right after the close this afternoon.

About this article:

Tagged: , Communication Equipment, Earnings
Problem with this article? Please tell us. Disagree with this article? .