Nokia entered into a licensing agreement with Samsung in 2013 that allowed both companies to use each other’s patents until the end of 2018. The settlement announced today was part of an independent arbitration on the agreement, lessening the likelihood of any messy lawsuits in the future.
When the latest announcement was made, Nokia’s shares fell 10 percent according to Reuters, as analysts over-estimated the settlement amount by $100 million for 2014 patent sales alone.
The settlement increases the patent sales to over $800 million for 2014 but analysts had predicted that figure to be closer to $900 million.
Nokia could potentially have gotten more money from the South Korean company if it hadn’t chosen to go down the arbitration route, but as Nokia’s President Ramzi Haidamus said: “the use of independent arbitration to resolve differences in patent cases is a recognized best practice.”
Apple recently came to a similar agreement with Ericsson and will be paying the company an undisclosed amount plus continuing royalties for seven years to use its patents.
Hardware manufacturers often have very fickle relationships when it comes to patents and sharing technologies, so Nokia and Samsung have shown a level of maturity. Nokia still has an ongoing case with LG to settle as well, so it could be about to get some more profits.
The settlement means that despite selling its phone business to Microsoft in 2014, the company will continue to reap the rewards of its once-dominant handset patents until the end of 2018.
The company is in the process of a makeover since its takeover of Alcatel-Lucent and is now focusing on networking and telecoms equipment. Nokia is now expected to receive $1.4 billion between 2016-2018, which should keep any worried shareholders on-side for now.