Apple and Ericsson Settle Litigation With Global Patent License Agreement

ipad_iphone_ios_8Ericsson announced today that it has reached a seven-year global patent cross licensing agreement with Apple for standard-essential technologies, including GSM, UMTS and LTE cellular standards, thereby settling all litigation between the two technology companies.

Apple will make an upfront payment to Ericsson and continue paying royalties on an ongoing basis. The terms of the agreement are confidential, but investment bank ABG Sundal Collier believes Apple could be charged around 0.5% of iPhone and iPad revenue, per Reuters.

The licensing agreement applies to several technology areas, including 5G development, video network traffic management and wireless network optimization, and grants certain other undisclosed patent rights. The deal ends all litigation before the U.S. International Trade Commission, U.S. District Courts and European courts.

"We are pleased with this new agreement with Apple, which clears the way for both companies to continue to focus on bringing new technology to the global market, and opens up for more joint business opportunities in the future," said Kasim Alfalahi, Chief Intellectual Property Officer at Ericsson.

Apple originally filed suit against Ericsson in January 2015, arguing that it was demanding excessive royalties for patents not essential to LTE standards. Ericsson countersued in a Texas courtroom just hours later, seeking an estimated $250 to $750 million in annual royalties for Apple to continue licensing its patented wireless technologies. Apple declined to honor those demands.

Ericsson subsequently sued Apple again in February 2015 for allegedly infringing 41 wireless-related patents that it believed to be critical to the functionality of products such as the iPhone and iPad. At the time, Ericsson filed two complaints with the U.S. ITC in an effort to secure a U.S. sales ban on infringing products, in addition to filing seven complaints with the U.S. District Court for the Eastern District of Texas.

The U.S. ITC agreed to launch an investigation into the Apple-Ericsson patent infringement claims in March 2015, and Ericsson extended the lawsuit to Germany, the Netherlands and the United Kingdom in May 2015, but today's agreement precedes any courtroom rulings.

Ericsson is the world's largest provider of mobile network equipment and holds over 35,000 patents related to 2G, 3G and 4G wireless technologies. Ericsson's cellular technology patents are considered essential and are subject to fair, reasonable, and non-discriminatory terms (FRAND).

Apple's previous licensing deal with Ericsson signed in 2008 expired in January 2015.

Top Rated Comments

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59 months ago
Come on, let's be FRANDS
Score: 10 Votes (Like | Disagree)
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59 months ago

It was always a question of how much to pay. If Erricson jumped its demands by 300% from the 2008 agreements, I could see App,e going: "Whoa buddy. WTF?"

According to court filings, Ericsson was offering Apple comparable terms to what everyone else pays.

If I remember correctly, Ericsson was demanding 3.5 - 5% of iOS revenue. If the story is correct, Apple got off royally if they're indeed only paying .5%. Still a lot of money.

It was only 1.5%, but (as I've pointed out here for years), such higher base rates are for deals without cross licensing.

Apple has always wanted to get lower rates without cross licensing. While that's an understandable business desire, it probably wouldn't sound fair to a jury that a company... which profits so much more than others... also wants to pay less than others for using the same technology.

So it likely was the threat of a Texas jury trial that made Apple's lawyers settle ahead of time. Same thing happened back when Nokia filed for a jury trial in Delaware. Not that it's a surprise. It was widely assumed Apple would have to cut a deal.

Plus, cross licensing helps everyone. It cuts down on royalties, and it cuts down on lawsuits. Apple is maturing in the phone maker business.
Score: 7 Votes (Like | Disagree)
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59 months ago
Pay up Apple, you can afford it.
Score: 3 Votes (Like | Disagree)
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59 months ago

Good to see this one end.

Finally. It took way too long for this conclusion.

I'd say... seven years it a bit long...

It brings me joy that our Apple stops being a pirate.

Please read the article a little closer. Apple and Erricson had an agreement in place since 2008 that expired in January of this year. The two were at odds over what the terms for renewal would be. So since they couldn't come to agreement in conference rooms they escalated things a bit. That's all. A few months for something like this to play out is not "a long time."

This was just a business negotiation that became contentious. Nothing more. Similar to when you see a broadcaster's programming temporarily removed from a cable or satellite provider's network over a royalty dispute. This happens so that one can use the pressure and embarrassment of news coverage and subscriber complaints to pressure an agreement on the other. Since there is no immediate remedy to a patent dispute (patent holders generally can't unilaterally "remove" their technology from the patent user's product) they resort to the pressure of a lawsuit.

There are patent trolls out there, but Erricson isn't one of them. Just a business trying to use their assets to maximize their profits. There are pirates out there, but Apple isn't one of them. Just a business trying to minimize the costs of producing a product that generates their profit, and keep/increase competitive advantage.

There was no drama. It was just business. Move along. There's nothing to see here.
Score: 3 Votes (Like | Disagree)
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59 months ago
Good to see this finally coming to a closure.
Score: 2 Votes (Like | Disagree)
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59 months ago

Apple originally filed suit against Ericsson in January 2015, arguing that it was demanding excessive royalties for patents not essential to LTE standards.

Can you please check this sentence? It doesn't make sense. For non-essential patents, there is no reason why Ericsson can't charge any amount they like, because they are not essential, which means Apple has the free choice of using them or not using them. If Ericcson demanded excessive royalties for patents _essential to LTE standards_, that's something that Apple could complain about.
Score: 2 Votes (Like | Disagree)

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