Apple will 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.

(Reuters) – Swedish mobile telecom gear maker Ericsson announced it had signed a patent license deal with Apple, ending a year-long dispute and sending its shares up 7 percent on Monday.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.

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.

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. 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. 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. 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.

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. 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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