Patent royalty battle between Ericsson and Samsung in the US
Ericsson has filed a patent royalty lawsuit against Samsung in the United States of America due to delay in royalty payments to the licensed patents of Ericsson; its income would be adversely affected by 1-1.5 billion Swedish Crowns per quarter from the beginning of 2021
In 2001, there was a deal between Ericsson and Samsung whereby the latter had signed a licensing deal covering handset and network patents. It was renewed in 2007 and after a long legal battle between the two entities, the deal was further renewed in 2014.
In 2012, there was a royalty dispute and patent infringement dispute between the petitioner and the defendant. The dispute was resolved in two years when Samsung compensated the mobile handset manufacturers for $ 650 million.
Again a lawsuit was filed by Ericsson (Petitioner) against Samsung (Respondent) in the U.S. for violating the rules of negotiations for payment of royalties to the licensed patents. Petitioner contended that delayed royalty payments and legal costs would adversely impact its income by 1-1.5 billion Swedish Crowns per quarter from the beginning of 2021.
The petitioner from its royalty patents payment expected an amount of about 29 billion Crowns of operating profit in the year 2021. However, the lawsuit could impact its earnings by 20 per cent per quarter and that is a huge loss to them.
The Petitioner also showed its concern for a shift in sales of handsets from 4G to 5G as it would adversely impact the royalty payments. However, the respondent did not promptly respond to the request of Ericsson.
Petitioner alleged that license renewal negotiations with the respondent would also delay the payment of royalties if the license is extended beyond the expiry period and it would not be able to generate timely revenue from it.
In the technology industry legal battle over royalty payments is a common phenomenon. Samsung had been indulged in many such legal suits with other Companies as well named Apple and Qualcomm over patent and royalty payment issues.