Ericsson and Apple settle patent disputes

23 Dec 2015 | Author: | No comments yet »

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

HELSINKI – Swedish telecoms firm Ericsson AB has inked a 7-year deal with Apple Inc. that brings an end to outstanding mutual patent litigations between the two and paves the way for their joint-development of the next generation of super-fast phones. Though the monetary sums involved were not disclosed, investors liked what they were hearing and Ericsson’s share price was up 5 percent at 82.35 kronor in late-afternoon trading in Stockholm. Ericsson, the world’s largest wireless equipment maker, did not reveal terms of the deal Monday but said it includes a cross-license that covers patents owned by both companies, including the GSM, UMTS and LTE standards used in mobile technology. 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.

In February, Ericsson filed complaints on 41 patents for technology used in iPhones and iPads after Apple declined to renew a licensing agreement for Ericsson’s mobile technology, saying the Swedish provider was asking for too much money. 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. Apple, the No. 2 smartphone maker with a 13 per cent global market share according to research firm Gartner, will make an initial payment to Ericsson, followed by royalties.

Monday’s agreement comes in an industry riddled with litigation over patents — companies sue each other for alleged copying appearances of products, with one study finding more than 250,000 patents in a smartphone. In the latest round of a long-running fight between Samsung and Apple, the South Korean company has appealed a $399 million judgment for illegally copying patented aspects of the look of Apple’s iPhone to the U.S. Although it gave no precise amounts, Ericsson said it expects revenues this year of some $1.4 billion this year, which includes “the positive effects” of the settlement and income from other licensees. 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. 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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