Swedish Company Ericsson Will Get Money Every Time Apple Sells an iPhone

By: | January 2nd, 2016

In February 2015, Ericsson filed a suit against Apple. Ericsson is a pioneering wireless technology company that owns several cellular connectivity and networking patents. The suit was filed with the International Trade Commission (ITC) and the U.S. District Court for the Eastern District of Texas. According to the suit, Apple was in severe violation of 41 patents as they pertain to their iPhone and iPad products. The patents also related to LTE and 2G technology, and software and component hardware design characteristics.

However, according to their latest announcement, the Swedish company has been able to reach a settlement over the GSM, UMTS and LTE technologies with Apple. For the next seven years, every time an iPhone or iPad is sold, Ericsson will be able to profit from it, as a fraction of the royalties will be paid to them after every sale.

Following the settlement of the ongoing patent infringement suit, the company released a press release that stated, “Ericsson (NASDAQ:ERIC) and Apple have agreed on a global patent license agreement between the two companies. In addition, the agreement includes releases that resolve all pending patent-infringement litigation between the companies.”

As expected, Ericsson dropped all its charges against Apple after reaching the settlement. It was unsurprising because Ericsson holds more than 35,000 patents and most of the cellular distribution and manufacturing companies are in agreement with the company. However, the licensing agreements had not been accepted by Apple, which resulted in the company paying Ericsson a lump sum amount in 2015, as well as for the royalties in the future. It is still unclear how much money Ericsson is going to make as a result of this agreement, but due to the dominant position of Apple in the consumer market, it can be assumed that it will be massive.

The licensing revenue for Ericsson in 2015 will be $1.5-$1.6 billion, which is a significant increase from last year. The two companies are now on good terms following the patent devolvement and have agreed to share and collaborate their technologies in the areas of network traffic management and network optimization. Ericsson stated in their press release, “The companies will collaborate in multiple technology areas, including the development of the next-generation 5G cellular standards, the optimization of existing wireless networks for the benefit of operators and users worldwide, and video traffic optimization.”

Kasim Alfalahi, Chief Intellectual Property Officer at Ericsson, said, “We are pleased with this new agreement with Apple, which clears the way for both companies to continue to focus on bringing new technology to the global market, and opens up for more joint business opportunities in the future.”

Paul Cook

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