Apple's Nokia Deal Could Cost Android Manufacturers Too

Apple's patent licensing deal with Nokia may have some additional consequences beyond the immediate effects of the settlement. By agreeing to a long-term licensing agreement with Nokia, Apple gets a lengthly, defensive legal fight out of the way. This allows Apple to focus all its legal energies on major battles with Samsung, HTC and Motorola.

Speaking with the NYTimes, Apple indicates that the settlement is actually a cross-licensing one:

Apple and Nokia have agreed to drop all of our current lawsuits and enter into a license covering some of each other’s patents, but not the majority of the innovation that makes the iPhone unique. We are glad to put this behind us and get back to focusing on our respective businesses.

There a larger, much more strategic victory here as well. By agreeing to pay royalties for Nokia's patents, Apple has set a market price -- and given Nokia's patents serious legitimacy. Apple wouldn't pay anything if they didn't have to, and other companies may not want to fight over turf Apple has already acquiesced to Nokia.

Other companies, notably Android handset manufacturers, may now have to play ball with Nokia on these patents -- and they don't necessarily have the margins to send 1% of gross revenues to Nokia as easily as Apple can. In fact, because Apple has so many of its own patents (some of which it cross-licensed to Nokia) other manufacturers may have to pay even more for the same licenses.

Florian Mueller has suggested just that at FOSS Patents:

Given that Android is in many ways a rip-off of Apple's operating software, Android-based devices are highly likely to infringe on largely the same Nokia patents that Apple now felt forced to pay for.
[...]
This is a sweet defeat for Apple because its competitors -- especially those building Android-based devices -- will also have to pay Nokia, and most if not all of them will likely have to pay more on a per-unit basis because they don't bring as much intellectual property to the table as Apple definitely did.

Apple pays off Nokia, but exposes the competition as well. Competition that doesn't have as much money or intellectual property to barter with.

(Photo by Acaben/Flickr)