Ericsson and Samsung in licensing deal

Ericsson and Samsung have reached an agreement on global patent licenses between the two companies. The cross license agreement covers patents relating to GSM, UMTS, and LTE standards for both networks and handsets and includes global patent cross licensing of cellular technologies.

The settlement impacts Ericsson sales and net income in Q4 2013 by SEK 4.2bn and SEK 3.3bn respectively. The details of the agreement are confidential and will not be disclosed.

Ericsson says it 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 licensing according to FRAND principles strikes the appropriate balance between incentivising companies to innovate and contribute technology to open standards and maintaining the overall royalty rates at a reasonable level to allow new entrants access to the market.

"We are pleased that we could reach a mutually fair and reasonable agreement with Samsung. We always viewed litigation as a last resort," said Kasim Alfalahi, Chief Intellectual Property Officer at Ericsson. "This agreement allows us to continue to focus on bringing new technology to the global market and provides an incentive to other innovators to share their own ideas."

This agreement ends complaints made by both companies against each other before the International Trade Commission (ITC) as well as the lawsuits before the U.S. District Court for the Eastern District of Texas.

The agreement includes an initial payment and ongoing royalty payments from Samsung to Ericsson for the term of the new multi-year license agreement. Ericsson expects that the initial payment in the agreement will impact Ericsson's operating cash flow in the beginning of 2014.

Information of the financial impact of the initial payment on Ericsson's Q4 2013 results will be included in Ericsson's Q4 2013 earnings report.