Nokia announced yesterday that it had signed a patent license agreement with Apple that will see the withdrawal by both parties of their respective complaints to the US International Trade Commission.
More importantly, Apple has also agreed a one-off payment of around £700 million - to cover the 108 million iPhones sold since its launch in 2007 - and an estimated eight Euros for every iPhone sold.
Nokia shares (opens in new tab) rose by 2.45 per cent yesterday to $6.26 but fell in pre-market trading by 1.6 per cent wiping out almost all the gains of the previous day and showing how fragile any signs of recovery can be for the Finnish manufacturer.
Nokia shares have fallen by almost 69 per cent since the 1st of April last year and could be in for another rough ride when the company announces it Q2 2011 Earnings Release at the end of next month.
Surprisingly, Apple has not yet issued a press release to highlight the patent agreement with Nokia, which leaves us to believe that the beleaguered phone manufacturer, for once, was in the driving seat.
Patent payments represent on average five per cent of the handset cost, or in the case of the iPhone, around $8 out of the estimated $264 cost of manufacturing the iPhone 4 which is then sold for more than double the price.
Apple sued Nokia over a scrolling technology patent back in January 2011 while Nokia filed a number of complaints with the ITC against Apple, some of which were rebutted, which makes Nokia's win even more puzzling.