Samsung and Ericsson End Patent Dispute for $650 Million and Years of Royalities

January 27, 2014 - Written By Cory McNutt

Patent Wars have really intensive with the advent of mobile technology – each manufacturer accusing the other of stealing their patented ideas.  The rapid growth of companies, such as Google, Samsung, and Apple, some would argue, has done so by employing “some” of the technology from another company.  Some disputes are settled quietly, out of the courtroom, by agreeing to pay a licensing fee and/or damages, while others are fought out in the courtroom and in public, like the Samsung versus Apple dispute.

One of the “quieter” disputes was between Samsung and Swedish firm, Ericsson – the world’s largest maker of wireless network technology.  The latest dispute started in 2012, after two previous agreements had already been worked through and expired – the terms of the latest agreement were not made public, but Kasim Alfalahi, Ericsson’s Chief Intellectual Property Officer, said that these sort of agreements are normally last between four to seven years. The dispute had to do with Samsung infringing on Ericsson technology for clearer voice transmission, touchscreen functions, and network efficiency.

The $650 million settlement, as well as the royalty payments, will boost Ericsson’s fourth quarter net profit by $513 million and as a result, their stock went up 3-percent.  Samsung’s, on the other hand, fell 1.2-percent.  This announcement falls on the heels of a Samsung-Google agreement just announced on Sunday and signed licensing agreement with Nokia in November.

According to Alfalahi:

“Our intention has always been to enter an agreement with Samsung.  Really, we have no interest in lengthy court processes and don’t want to make life hard for Samsung or anyone else for that matter…I’m truly pleased that we didn’t need a court order to agree in the end.”  

According to Alfalahi, they had been in constant negotiations with Samsung during the dispute.  Samsung added that it “always preferred negotiations over litigation.”  It is certainly a shame that Apple and Samsung cannot have that sort of open dialog and determination to strike a fair deal.

Ericsson holds one of the largest patent portfolios, with approximately 33,000 and annually invests about $4-5 billion on research and development – roughly 15-percent of its total costs.  They claim to be the number one holder of patents for third and fourth generation wireless technology and own about 25-percent of all LTE patents.

Source: reuters, wsj

Image Credit: Slashgear