Having overpowered the iPhone's design patents, Nokia likely now to go after Android

The settlement of its epic 20-month patent dispute with Apple (AAPL) that Nokia (NOK) announced early Tuesday could spell trouble for the makers of Android phones.

There's no question Apple lost the legal battle that pitted its significant intellectual property holdings against Nokia's even deeper patent portfolio. The terms of the settlement were not disclosed, but they require Apple to make a one-time payment and ongoing royalties large enough to materially improve Nokia's earnings for the quarter. Nokia's stock was up 3% in European trading.

Apple shares also rose on the Frankfurt exchange Tuesday, however. According to FOSS Patents' Florian Mueller, who had predicted this outcome, it frees up resources for both companies.

"Apple is embroiled in litigation with the three leading Android device makers (Motorola, HTC and Samsung). Nokia doesn't have any litigation worries at the moment, but part of its new strategy is to ratchet up the monetization of its patent portfolio. The fact that Nokia has demonstrated its ability to defeat Apple -- after the most bitterly contested patent dispute that this industry has seen to date -- is a clear proof of concept. Other companies whom Nokia will ask to pay royalties will have to think very hard whether to pay or pick a fight."

Mueller says Nokia's next target is likely to be the cellphone manufacturers that have hitched their smartphone strategies on Google's (GOOG) software. "Given that Android is in many ways a rip-off of Apple's operating software," he writes, "Android-based devices are highly likely to infringe on largely the same Nokia patents that Apple now felt forced to pay for."

In prepared statements, Nokia declared victory and Apple expressed relief.

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