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Ericsson Telephone Company (Nasdaq: ERIC) filed a lawsuit in the United States against Samsung for infringing its patents, after nearly two years of negotiations failed to reach an agreement.
The dispute concerns both Ericsson’s patented technology that is essential to several telecommunications and networking standards used by Samsung’s products as well as other of Ericsson’s patented inventions that are frequently implemented in wireless and consumer electronics products. Ericsson has concluded that it has no option other than legal action after negotiations have not been successful since Samsung has refused to take a license on FRAND terms.
Ericsson helped to create the mobile telephone system by contributing hundreds of its inventions to the standard in exchange for a fair royalty. To date, Ericsson has signed more than 100 license agreements with all major players in the industry.
In 2011 alone, Ericsson spent SEK 32.6 b. (USD 5.0 b.) on research and development. This has resulted in hundreds of patented inventions that are essential to the standards that drive global communications, such as GSM, GPRS, EDGE, WCDMA, LTE and 802.11 as well as many other patented inventions that are widely implemented in most popular wireless and consumer electronics products. Ericsson holds one of the strongest patent portfolios in the industry with more than 30,000 patents worldwide.
Ericsson is committed to licensing its standard-essential patents on Fair, Reasonable and Non-Discriminatory (FRAND) terms for the benefit of the industry. It believes that FRAND licensing strikes the appropriate balance between incentivizing companies to contribute technology to open standards and maintaining the overall royalty rates at a reasonable level to allow new entrants access to the market.
Despite nearly two years of negotiations involving the most senior management of both companies, Samsung refused to renew its license to Ericsson’s industry leading portfolio of telecommunications patents on the same (“FRAND”) terms that its competitors have previously accepted.
Samsung previously licensed Ericsson’s patents in 2001 and renewed in 2007, but its license has now expired. Ericsson has extended an offer to Samsung to renew the license during negotiations that have lasted nearly two years. These negotiations have not been successful since Samsung has refused to take a license on FRAND terms.
The complaint is filed in the District Court for the Eastern District of Texas, USA, which is the district where Ericsson’s US headquarters is located.
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