Qualcomm, Nokia deal ends long legal battle

By Sinead Carew

NEW YORK (Reuters) - Qualcomm Inc (QCOM.O) and Nokia (NOK1V.HE) late on Wednesday settled a 3-year, three-continent legal battle over patent licenses and royalties for the next 15 years.

Nokia, the world's top cellphone maker, agreed to make an upfront payment and pay royalties to the U.S. technology company, but said payments per phone would fall.

Investors, relieved that the fight was finally over, drove Qualcomm's shares 15 percent higher to $51.75 in after-hours trade after the two firms unveiled the pact.

The deal, which ends all legal cases between the two firms, covers the world's most widely used mobile phone technologies and some key emerging ones.

The companies did not reveal specific financial details but some analysts saw Nokia as the winner.

Nokia's Chief Financial Officer Rick Simonson said the terms of the new agreements were very different from the 1992 and 2001 patent deals between the two firms.

"We have recognized in this agreement and in (the) financial terms of this agreement our very significant IPR position," he told Reuters in an interview.

"There is no more disagreement, battle or any conflict between two of the leaders in the industry, Nokia and Qualcomm, and I think it is terribly important," he said.

"Have we done a good thing for industry? Absolutely. Have we done good for Nokia? Positively, yes."

Nokia had been pressing Qualcomm for a cut in the rate it was paying Qualcomm in royalties under a pact that expired in April 2007. Analysts estimated that rate at 4-5 percent.

Stifel Nicolaus analyst Cody Acree said a Nokia success could lead other Qualcomm clients to look for lower royalty rates or start new legal fights.

"Investors are giving Qualcomm immediate credit in after-hours trade but it's not cut and dried," Acree said. "It could put some pressure on the royalty models or in chipset volumes that Qualcomm hasn't had to deal with in the past."

Qualcomm chip customers include Samsung Electronics (005930.KS) and LG Electronics (066570.KS). Rivals include Texas Instruments Inc (TXN.N), Broadcom Corp (BRCM.O) and Infineon Technologies AG (IFXGn.DE).

Qualcomm officials did not return calls requesting comment beyond its statement.

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