updated 12:03 pm EST, Mon January 27, 2014
Samsung to pay initial fee plus royalties for access to Ericsson patent portfolio
Samsung has signed a patent cross-licensing deal with Ericsson, in order to bring to an end the various patent lawsuits between the two companies. Though the finer details of the agreement have not been disclosed, the deal will see Ericsson providing Samsung access to its patents relating to GSM, UMTS, and LTE standards for both networks and devices, in exchange for in excess of $500 million.
Neither side has revealed exactly how much will be paid by Samsung, though it is confirmed Samsung will pay an initial fee followed by ongoing royalty payments for the term of the multi-year license agreement. The extent of the cost to Samsung for both sets of payments is unknown, but Ericsson did reveal that the initial payment in the agreement will increase its sales for the fourth quarter of 2013 by 4.2 billion kronor ($652 million) and net income by 3.3 billion kronor ($512 million.) While Kasim Alfalahi, chief intellectual property officer for Ericsson, did not reveal to Reuters how long the multi-year agreement would last for, he did suggest patent licensing deals such as this typically cover a four to seven-year period.
Probably the most important aspect of the deal is the courtroom ceasefire between the two companies. Current legal action by Samsung and Ericsson will stop, including lawsuits before the International Trade Commission and the US District Court for the Eastern District of Texas. Despite the licensing fees, this helps Samsung avoid another potential courtroom disaster, as it saw during its billion-dollar loss against Apple in 2012. It is unclear how this will affect the dealings of the Rockstar Consortium, a collection of companies including Ericsson that has pursued patent infringement lawsuits against Samsung, among others.
Over the weekend, Samsung signed a similar deal with Google to share their patents with one another, though that agreement does not appear to have any fee-related component for either side.