Apple Signs Peace Deal With Ericsson

23 Dec 2015 | Author: | No comments yet »

Apple Signs Peace Deal With Ericsson.

Swedish mobile telecom gear maker Ericsson ERIC -0.33% announced it had signed a patent license deal with Apple Inc AAPL -2.55% , ending a year-long dispute and sending its shares up 7% on Monday. The terms of the agreement are confidential, according to the Ericsson statement, but it “includes a cross licence covering the patents on essential standards of the two companies (including GSM, UMTS and LTE standards) and provides certain other patent rights. Ericsson did not specify how much it would earn from the deal but estimated overall revenue from intellectual property rights in 2015 would hit 13 to 14 billion crowns ($1.52-$1.64 billion), including positive effects from the settlement with Apple, up from 9.9 billion crowns in 2014. Investment bank ABG Sundal Collier said in a note to clients it believed the deal meant Apple would be charged around 0.5% of its revenue on iPads and iPhones by Ericsson. While Ericsson no longer makes mobile phones, it remains a leading manufacturer of equipment for mobile networks, and has more than 35,000 technology patents and 100 patent-licensing agreements worldwide.

Ericsson Chief Intellectual Property Officer Kasim Alfalahi said the agreement was broad, covering the latest 4G-LTE generation of mobile technology, as well as the earlier 2G and 3G technologies. “It means we can continue to work with Apple in areas such as 5G radio network and optimization of the network,” Alfalahi told Reuters, but declined to provide further financial details. Ericsson filed a complaint against Apple over mobile technology license payments in January, responding to a lawsuit filed by the iPhone maker that month. Apple filed a legal complaint in January against Ericsson, claiming the patents were not up to industry standards and that the Swedish group had asked for excessive royalties for them in its licensing renewal offer.

Analysts had estimated that if the dispute with Apple went Ericsson’s way, the U.S. firm would have to pay it between 2-6 billion Swedish crowns annually, based on estimates of levels of handset sales and royalty payments per phone.

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