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Business Management

Apple to pay Ericsson patent royalties on iPhones and iPads

Apple has agreed to pay Ericsson royalties on the wireless devices it sells in settlement of a long-standing patent dispute.

Ericsson owns patents that it considers essential to the implementation of a number of mobile communications standards, including GSM, the 3G standard UMTS and LTE, used in 4G networks. While it has licensing agreements with other manufacturers of devices operating on these networks, a deal with Apple expired at the start of this year.

When negotiations to renew that deal broke down, Apple and Ericsson sued one another in the U.S. District Court for the Eastern District of Texas, Apple claiming that it did not infringe one of the key patents at issue, and Ericsson that Apple owed it for licenses for its entire standards-essential patent portfolio.

Six weeks later, Ericsson returned to the Texas court with seven new lawsuits, and filed two others with the U.S. International Trade Commission, alleging that Apple infringed its patents on 2G, 3G and 4G network technologies. It asked the courts to block sales of the iPhone and iPad until Apple paid up.

Now the two companies have called a truce, signing a global cross-license agreement for patented standards-essential technologies, they said Monday.

The confidential agreement ends all ongoing patent-infringement claims between them, including the Texas cases and other disputes in California, the U.K., Germany and the Netherlands, they said.

Apple will pay Ericsson an initial lump sum and ongoing royalties for the seven-year duration of the deal. While the companies would not disclose further details of their agreement, Ericsson gave a hint about its value.

For the full year 2015, Ericsson predicts its intellectual property rights revenue will amount to between 13 billion and 14 billion Swedish krona (US$1.64 billion).

In comparison, it reported IPR revenue of 10.6 billion krona for the full year 2014, including a 4.2 billion krona lump sum in settlement of a similar global dispute with Samsung Electronics. The previous year, before reaching that agreement, Ericsson's IPR revenue totaled 6.6 billion krona, it said.

IDG Insider

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