Why Qualcomm Folded to Nokia

The longest running, highest-stakes poker game in the history of the mobile industry came to a surprising conclusion July 23, when Nokia (NOK), the world's largest mobile-handset maker, and Qualcomm (QCOM), the largest chipmaker for cell phones, suddenly agreed to settle their legal battles over intellectual property and royalties, just as a pivotal court case in Wilmington, Del., was about to begin. The accord will have wide-ranging implications for both companies and the future of the mobile sector.

The two sides said they have agreed to drop all legal complaints against each other in the U.S., Europe, and Asia. The companies also struck a 15-year licensing deal that gives Nokia rights to a wide portfolio of Qualcomm patents, covering a wide range of different-generation mobile-phone standards. Nokia will pay Qualcomm an up-front sum and ongoing royalties, but the companies did not elaborate on terms. The Finnish phonemaker agreed not to use any of its patents directly against Qualcomm, allowing the U.S. chipmaker to integrate Nokia technologies into its chip sets. Nokia will also hand over to Qualcomm several essential patents in fourth-generation wireless networking technologies known as Long Term Evolution (LTE) and WiMAX.