Happy Christmas (war is over)
- Ericsson and Apple settle their year-long patent dispute
- Apple rumoured to have to pay Ericsson 0.5% of iPhone and iPad revenues
- The two companies will collaborate on 5G work
Over the weekend there was an Awakening in the Force; yet there appears to have also been an awakening of realism in the murky world of patents and IPRs. In a rather sensible move, Ericsson and Apple have announced that they have reached an agreement on a global patent license arrangement between the two companies. Good news for Ericsson and Apple, not so good news for the army of lawyers to whom patent litigation is a never-ending source of vast amounts of cash.
This is a significant announcement as Apple is the world’s leading mobile device manufacturer and Ericsson the leading infrastructure company – and one of the most important technology contributors to the development of today’s mobile systems. Yet neither company can afford to rest on its laurels and assume future systems and technology will be iterations of what we have now, all utilizing the same core (and license fee generating) patents. Far from it; the technology that will underpin 5G architectures will lead to a massive disruption in the IPR model – so it’s a case of “better the devil you know”, suck it up and move on to bigger and better things.
The agreement between Ericsson and Apple includes a cross license that covers patents relating to both companies' standard-essential patents (including the GSM, UMTS and LTE standards), and grants certain other patent rights. In addition, the agreement includes releases that resolve all pending patent-infringement litigation between the companies. This includes investigations in the US and lawsuits in the UK, Germany and the Netherlands.
As part of the seven-year agreement, Apple will make an initial payment to Ericsson and, thereafter, will pay on-going royalties. The specific terms of the contract are confidential. However, Ericsson believes that when it includes the positive effects from the settlement, plus the ongoing IPR business with all other licensees, it should book full year 2015 IPR revenues of around $1.5bn. Investment bank ABG Sundal Collier believes Apple will have to pay 0.5 per cent of its revenue on iPads and iPhones to Ericsson.
"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," said Kasim Alfalahi, Chief Intellectual Property Officer at Ericsson.
In addition, the companies say they will collaborate in multiple technology areas, including the development of the next generation 5G standards, the optimisation of existing wireless networks for the benefit of operators and users worldwide, and video traffic optimisation.
In a separate announcement last week, Apple named Jeff Williams as its new chief operating officer (finally filling the position left vacant by Tim Cook when he became CEO). Williams played a key role in Apple’s entry into the mobile phone market with the launch of iPhone, and he continues to supervise development of the Apple Watch. Expect to see more of him, and his influence within the company, in the year ahead.
Also today, Ericsson has signed an agreement with Mobile TeleSystems MTS of Russia to cooperate on 5G research and deployment, including the use of unlicensed spectrum, and hopes to key technologies in place in time for a demonstration during the 2018 FIFA World Cup.