War and peace: agreement between Apple and Ericsson on essential patents
In peacetime, the famous producer of the iPhone paid, for a long time, royalties to Ericsson for the use of its technology (including the radio communication standard “4G”), protected by over 40 patents. However, war burst as soon as the license agreement expired. From that moment on Apple refused to pay further royalties to Ericsson. Being impossible to reach an agreement, the case went to Court (in the USA and in Europe as well).
In December of last year, peace came back.
The American and Swedish companies managed to solve their problem and finished the patent dispute. They signed a new license agreement according to which Ericsson, in exchange of the payment of a lump sum by Apple, grants to the latter the use of the technology covered by its patents, including older generations of radio communication standards (from 1G to 4G). Furthermore, both companies decided to collaborate for the development of future standards such as 5G.
The case that we just described in a very short way, is a good example that shows how lawsuits may not only be won or lost, but also they may represent the only way to make possible the impossible: in front of a real and imminent threat of an unknown solution, imposed by a judge, the parties who prefer to control their own future, rethink their positons, probably become more flexible and manage to reach a “friendly” agreement, unlike in another renowned case of conflict on patents between Apple and Samsung.
Actually, what happened between Apple and Ericsson is not new.
Indeed, it has already been seen in the telephone industry that a mobile manufacturer, a network operator and a network provider, working all of them on a new standard for the field of radio communication, convert from being competitors to partners in a common project. So, each of them can further investigate to seek the right patent protection.
Later, these “essential patents” are made available for everybody in exchange of a royalty fee that must be fair, reasonable and non-discriminatory (a “FRAND license”). In this way, everyone can enjoy the advantage of the new standard and the users will be able to move easily from one network to another.
Coming back to Ericsson, to conclude and as a curiosity, we would like to mention that the company at issue has other similar license agreements with more than 100 companies. In 2015, according to its own statements, those licenses could have generated an income of more than one billion euros.
Alessandro Di Marco