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Nokia and Apple are exploring working on health tech together after settling patent dispute

  • Nokia and Apple have settled a patent dispute that has been running since December.
  • Nokia will receive an up-front cash payment from Apple and additional revenues.
  • The two companies also said they are exploring working on "digital health initiatives" together.

Apple and Nokia have ended their patent dispute that started last year, the companies announced on Tuesday, and said they were exploring working together on "digital health initiatives".

Nokia will receive an up-front cash payment from Apple and additional revenues during the term of the agreement. The news sent Nokia shares up around 6.7 percent.

In December, Apple filed a lawsuit against third-party companies that it said Nokia had transferred patents too. Apple said it was already paying royalties to Nokia for certain technologies used in its products, but that the Finnish firm transferred some patents to third-parties in order "to be used for extorting excessive royalties".

The new iPhone 7 is displayed on a table at an Apple store in Manhattan on September 16, 2016 in New York City.
Getty Images
The new iPhone 7 is displayed on a table at an Apple store in Manhattan on September 16, 2016 in New York City.

Nokia hit back and sued Apple directly saying that the company declined to license its other technologies used in various products.

Now that five-month battle has come to an end.

Under the deal, Nokia will provide certain network infrastructure products and services to Apple. The Cupertino-based giant will resume stocking Nokia digital health products — such as smartwatches — in its online and physical stores.

Details of the deal remain confidential but Nokia will receive an up-front payment and additional revenues as a result. The value of the agreement will be partially reflected as patent licensing net sales in Nokia's "Technologies" business unit, and in its other segments. Revenues for the agreement will start to be recognized in the second quarter of 2017, Nokia said.

"This is a meaningful agreement between Nokia and Apple," said Maria Varsellona, chief legal officer at Nokia. "It moves our relationship with Apple from being adversaries in court to business partners working for the benefit of our customers."

The two firms also said that they are "exploring future collaboration in digital health initiatives", though neither company elaborated on the details of this.

Last year, Nokia bought French health technology hardware maker Withings for 170 million euros ($191 million) to boost its presence in the space. And Apple CEO Tim Cook has spoken about the company's ambitions in the health space with products such as the Apple Watch and the company has been working on new developments internally.

Apple has hired a small team of biomedical engineers to work at a nondescript office in Palo Alto, California, miles from corporate headquarters. They are part of a secret initiative to develop sensors that can noninvasively and continuously monitor blood sugar levels to better treat diabetes, three people familiar with the matter told CNBC recently.

"We are pleased with this resolution of our dispute and we look forward to expanding our business relationship with Nokia," Jeff Williams, Apple's chief operating officer, said in a statement on Tuesday.