Ericsson (ERIC) has ended a major patent dispute with Samsung in an agreement that the company hopes will set a precedent for the wireless industry. “We feel that this is a very important agreement to be viewed as a precedent for other companies, to see that FRAND licensing actually works,” said Kasim Alfalahi, chief intellectual property officer at Ericsson. FRAND means “fair, reasonable and non-discriminatory,” and patent holders typically agree to license patents within the FRAND framework when they are approved by a standards body like 3GPP. These lawsuits dealt primarily with “standards essential patents” covering technologies needed to make devices operate on cellular networks.
The cross license agreement covers patents relating to GSM, UMTS, and LTE standards for both networks and handsets. In 2012, Ericsson sued Samsung, saying that the two companies had been unable to renew an agreement related to patents Ericsson initially licensed to Samsung in 2007. Samsung also holds some standards essential patents, and Ericsson said the conglomerate was unwilling to license those on fair and reasonable terms.
“We have signed more than 100 agreements to date without having to resort to litigation, so when we made the decision it was very difficult to do in 2012,” said Alfalahi. The suits alleged that Samsung was infringing various wireless standards essential patents held by Ericsson. The first lawsuit filed by Ericsson listed 11 patents and the second listed 13 patents, including one held by Samsung that was related to “display control in a handheld data processing device.”
“Always during the whole time of litigation we kept a dialogue because are strong believers that the best way to resolve these issues is actually between the parties. And I think that is also proven now,” said Alfalahi today.
Ericsson did not release details about the terms of the settlement, but did say that the initial payment resulting from the agreement will add 4.2 billion krona ($653 million) to its fourth quarter sales, and 3.3 billion krona ($513 million) to net income. Ericsson will report fourth quarter results on Thursday.
Alfalahi said the settlement ends all ongoing patent litigation between the two companies, and that it clears the way for both companies to move forward and innovate. “For us this ecosystem is very, very important,” he said. “If we look at Ericsson, when we started with cellular technology, there were basically no users. So for us to be part of this journey to 6.6 billion subscribers last year, it’s amazing. For us it’s encouraging to see players like Samsung, or any other player, entering the market and making a success and continuing to bring product to the market. We are very positive. So that’s why for us we’d rather get deals done than actually have a litigation, because for us there is no incentive to stop anyone.”
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