Nokia Oyj (NYSE:NOK) shares jumped 5.40 percent on Wednesday after the Finnish telecom equipment maker resolved a patent conflict with Apple Inc. (NASDAQ:AAPL). The iPhone maker also decided to buy more of NOK’s products and services that means the Finnish company will get bigger royalties from AAPL for using its mobile phone patents.
NOK’s patent cover technology that limits the hardware components inclusion in a phone that in turns boosts battery life and radio reception, enables voice recognition and some other features and also helps in recovering lost phones.
The agreement will help Nokia in offsetting the impact of fading demand for its mobile network hardware. Nokia will also deliver network infrastructure products to the iPhone maker, under the deal made public jointly by the two companies on Tuesday. AAPL will also recommence sales of Nokia’s digital health gadgets in retail stores and plans to collaborate further in health space.
Nokia is focusing on digital health as a part of its efforts to step in new businesses in order to make up for the decline in network equipment demand. The company acquired France-based Withings S.A., which is a small firm offering products including baby monitors and activity trackers.
Speaking at the company’s annual general meeting on Tuesday, CEO Rajeev Suri said the deal would help in expanding Nokia’s network sales to internet and technology giants across the globe.
Apple will pay significant upfront cash payment to Nokia, under the new patent license deal.
A previous patent license agreement between the two companies expired in 2016. Subsequently, both AAPL and NOK initiated legal action in December—Nokia blamed Apple of breaching technology patents, while the iPhone maker accused the Finnish company for overcharging it.
The two tech giants quickly settled the dispute, which started in December last year. Industry experts were surprised by the relatively fast resolution between the two companies as such legal conflicts are common in the business world and can last for years.
Nokia shares hit a new 52-week high of $6.65 in the last trading session following settlement of patent dispute with Apple.