HTC became irrelevant to Apple
Apple settled with HTC because HTC stopped being a competitive threat after effectively falling out of the Android market. The Apple/MS 'secret' deal also protects HTC WP7/8 sales from Apple interference.
With the stakes so low risking a possibly catastrophic trip to court no longer makes sense for Apple, having lost almost every case that reached court (and they've not even actually won against Samsung *yet*). Probably some attempt to hobble the weakened HTC in the deal but for Apple this was just closing down an pointless side war.
I share the opinion this was a catastrophic tactical error by Apple that will end their attempts to obstruct competition much faster.