Nokia Shares Drop Over Patent Tussle Vs. Apple

By Milton Letterman , Updated Dec 24, 2016 05:18 PM EST

Nokia saw its share value sink by 5% on Thursday over patent issues with Apple. Said legal tussle can take a hit on Nokia's profits due to resulting delays in royalty payments.

With Nokia's contract with Apple on patent license expiring at the end of the year, both sides have taken issues against the way their agreement has run its course. Fortune reported that Nokia alleges Apple of breaching specific patents, while the latter accuses the former of overcharging payments.

According to Reuters, the Finnish tech company has now filed over 40 patent lawsuits in 11 countries, many of which tackle issues on software, chip sets, and displays. Nokia patent business head Ilkka Rahnasto released a statement, saying that the company "has created or contributed to many of the fundamental technologies used in today's mobile devices, including Apple products."

"After several years of negotiations trying to reach agreement to cover Apple's use of these patents, we are now taking action to defend our rights," Rahnasto added. Currently, only a very small portion of Nokia's revenue come from patent royalties. Yet, with the network business slumping across the industry, the company is relying heavily on licensing's profitability.

Inderes analyst Mikael Rautanen said that a new license contract between Nokia and Apple, which will most likely involve upgraded terms, may not be realized soon because of the dispute. Moreover, the multiple lawsuits involving the two companies would only add to their litigation expenses as well as several uncertainties, hence a drop in Nokia's share value being natural.

Apple, through spokesman Josh Rosenstock in another Reuters report, insists that Nokia has attempted to take undue advantage of the company's patents "they have nothing to do about." Rosenstock added that Nokia unfairly licensed their patents, branding its patent lawsuits as a wholesale attempt to wrest more profits from Apple.

Maynard Um, Wells Fargo Securities analyst, noted that Nokia and Apple's demands may be "far apart" from each other, as suggested by the lack of arbitration. Apple, in particular, focuses more on the price of patents less than their validity, contrary to what Nokia is pushing regarding the California tech giant's patent infringements. Watch USA Today's report on the issue below:

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