Ericsson and Samsung have reached a multiyear global patent licensing agreement for cellular technologies including 5G, marking a surprisingly swift end to their legal disputes.
Ericsson investors will be pleased, after the Swedish firm reported reduced IPR licensing revenue in its first quarter because of the unresolved situation with. Wall Street analysts at Cowen & Co now expect to see an accelerated resolution of other Ericsson’s other outstanding licensing renegotiations, since Samsung’s size would give it “lead steer status”, as they put it.
“In addition to likely impacting timing of overall resolution of IPR renegotiations tied to 5G, the new agreement with Samsung also largely address the future impact of these IPR contract renegotiations given Samsung’s position as the largest 5G handset supplier,” wrote Cowen analysts led by Paul Silverstein.
The new cross-licensing deal covers sales of network infrastructure and handsets from January 1 2021 but no further details were disclosed.
Ericsson expects second quarter licensing revenues, including two quarters of sales covered by the new Samsung contract, to be between SEK2bn and SEK2.5bn ($240.3m to $300.3m). In Q1, IPR revenues fell to SEK800m ($96.1m).
The company’s IP portfolio includes more than 57,000 patents and Ericsson invests around SEK40bn ($4.8bn) in R&D each year.
“We are delighted to sign a mutually beneficial agreement with Samsung,” said Christina Petersson, chief intellectual property officer at Ericsson, in a statement. “This important deal confirms the value of our patent portfolio and further illustrates Ericsson’s commitment to FRAND [fair reasonable and non-discriminatory] principles.”
The settlement puts an end to lawsuits between the two companies in several countries, and to complaints filed by both suppliers with the US International Trade Commission (ITC), and in US district courts.
Last time the companies were engaged in patent litigation was in 2012 and that took two years to resolve, with Samsung finally agreeing to a settlement that involved a $650m payment to Ericsson, plus royalties.
Another outstanding patents battle for Ericsson is with Dutch telco KPN, which filed a patent infringement complaint against the vendor in February, in a district court in Texas, alleging violation of five of its patents related to various wireless network functions. In a court filing, KPN said it had offered Ericsson licences, but the offer was not accepted. Ericsson has not commented.
Meanwhile, Nokia has struck its own patent agreement, this time with Lenovo of China. The two companies have signed a “multiyear, multi-technology patent cross-license agreement” that involves Lenovo making a net balancing payment to Nokia. All pending patent litigation and other proceedings are now dropped, but financial details were not disclosed.
Nokia and Lenovo have been in dispute since 2019, when the Finnish vendor filed lawsuits against the Chinese firm in various countries, including Germany and the USA, over alleged infringement of about 20 patents related to video compression standard H.264. At one point, a court in Munich, Germany ruled against Lenovo and ordered a recall of the PC maker’s products from retailers. Lenovo appealed on the grounds that Nokia was not licensing its technology according to FRAND principles – the basis for international patent licensing, though often ill-defined. A Lenovo source told Reuters at the time that Nokia was “demanding a highly inflated global royalty rate that is more than 50 times what Lenovo believes is reasonable and appropriate”.
Now, following the truce, Nokia Technologies’ chief Jenni Lukander said in a statement: “We appreciate, and very much respect, the constructive spirit Lenovo brought to our negotiations and look forward to working together to bring further innovation to their users around the world.” She added that the deal “reflects Nokia’s decades-long investments in R&D and contributions to cellular and multimedia standards”.
John Mulgrew, Lenovo’s chief intellectual property officer, said: “Our agreement with Nokia reflects the value of both Nokia’s technology leadership and Lenovo’s continued investment in 5G innovation.”