comscore Ericsson, Samsung sign license agreement that brings their patent battle to an end
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Ericsson, Samsung sign license agreement that brings their patent battle to an end

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Ericsson today announced that it has signed an agreement with Samsung that would end all patent-related disputes between the two companies. The agreement includes Samsung paying a one-time fee of $652 million as well as an undisclosed sum in recurring royalty payment. This past weekend, Samsung had signed a similar global patent licensing agreement with Google. Also Read - Galaxy A22 replaces M42 5G to become the cheapest 5G Samsung phone in India

The company had filed a patent lawsuit in Texas in 2012 alleging that Samsung was using its patented technologies without paying any license fee. By signing this agreement, both the companies have settled the matter outside the courts and Samsung has cleared the way to develop new hardware without having to worry about infringing any patents.

This agreement allows us to continue to focus on bringing new technology to the global market and provides an incentive to other innovators to share their own ideas, Kasim Alfalahi, Ericsson’s chief intellectual property officer, said.

Ericsson holds a number of essential patents related to GSM, UMTS and LTE standards, which it is bound to make available under fair, reasonable and non-discriminatory (FRAND) terms, which will be covered under this agreement. Ericsson has also been in a similar battle with Indian smartphone vendor Micromax, wherein it sued the former for patent infringement. The long-drawn battle has seen quite a few twists and turns and though Micromax has been keen on negotiating a FRAND license with Ericsson, the companies have yet to come to a suitable conclusion.

The press release announcing the Ericsson-Samsung deal follows:

Ericsson and Samsung reach agreement on licensing terms

  • Settlement ends all ongoing patent related legal disputes
  • Agreement includes global patent cross licensing of cellular technologies
  • License illustrates Ericsson’s commitment to FRAND principles
  • Settlement impacts Ericsson sales and net income in Q4 2013 by SEK 4.2 b. and SEK 3.3 b. respectively.

Ericsson (NASDAQ: ERIC) and Samsung have reached an agreement on global patent licenses between the two companies. The cross license agreement covers patents relating to GSM, UMTS, and LTE standards for both networks and handsets.

Ericsson is committed to licensing its standard-essential patents on fair, reasonable and non-discriminatory (FRAND) terms for the benefit of the industry. It believes that licensing according to FRAND principles strikes the appropriate balance between incentivizing companies to innovate and contribute technology to open standards and maintaining the overall royalty rates at a reasonable level to allow new entrants access to the market.

“We are pleased that we could reach a mutually fair and reasonable agreement with Samsung. We always viewed litigation as a last resort,” said Kasim Alfalahi, Chief Intellectual Property Officer at Ericsson. “This agreement allows us to continue to focus on bringing new technology to the global market and provides an incentive to other innovators to share their own ideas.”

This agreement ends complaints made by both companies against each other before the International Trade Commission (ITC) as well as the lawsuits before the U.S. District Court for the Eastern District of Texas.

FINANCIAL IMPACT

The agreement includes an initial payment and ongoing royalty payments from Samsung to Ericsson for the term of the new multi-year license agreement.

The initial payment in the agreement will impact Ericsson sales and net income in Q4 2013 by SEK 4.2 b. and SEK 3.3 b. respectively. Ericsson expects that the initial payment in the agreement will impact Ericsson’s operating cash flow in the beginning of 2014.

The details of the agreement are confidential and will not be disclosed. Information of the financial impact of the initial payment on Ericsson’s Q4 2013 results will be included in Ericsson’s Q4 2013 earnings report.

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  • Published Date: January 27, 2014 3:23 PM IST



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