Apple to pay Ericsson patent royalties on iPhones and iPads

23 Dec 2015 | Author: | No comments yet »

Apple may cut Ericsson in for 0.5% of revenue on every iPhone sold.

Stockholm: Swedish mobile telecom gear maker Ericsson said it had signed a patent licence deal with Apple Inc. over technology that helps smartphones and tablets connect to mobile networks, sending its shares up much as 8%. 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.The specific terms of the contract are confidential but news of the deal sent the Swedish network-equipment vendor’s shares 7% higher in early trading Monday.Stockholm: Swedish telecoms giant Ericsson has reached a global licensing agreement with Apple that settles several earlier patent disputes between the two companies, Ericsson announced on Monday. The deal ends a year-long dispute with Apple, one of the biggest legal battles in mobile technology and Ericson said it would pave the way for cooperation between the companies on future technologies.

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. The dispute between the world’s largest maker of wireless network technology and Apple highlights the complex corporate relationships in the telecom sector, where standardization of technologies and increased penetration of smartphones rely on sharing research and development globally.

Ericsson had said in its filing to a US district court in January that Apple’s licence to use the technology developed by the Swedish firm had expired, and that two years of negotiations had not led to a new deal. Investment bank ABG Sundal Collier said in a note to clients it believed the deal meant Apple would be charged around 0.5 percent 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. The Swedish company said in February the patents concerned the technology in older and current-generation mobile systems, as well as for features like live streaming of television shows and accessing apps on phones. 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.

UBS estimated the agreement would boost Ericsson’s operating profit by 13% in 2015 and 10% in 2016, providing 775 million crowns per quarter in licensing fees. Ericsson filed a complaint against Apple over mobile technology license payments in January, responding to a lawsuit filed by the iPhone maker that month. 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. Shares in Finland’s Nokia, which by the end of January will get an arbitration verdict over how much South Korea’s Samsung will have to pay it in patent licensing fees, rose 2.4%.

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.

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