Apple Accused of Bad Faith in Ericsson Patent Royalty Talks
(Bloomberg) -- Ericsson AB filed a lawsuit Monday accusing Apple Inc. of engaging in unfair tactics to avoid paying royalties for the use of baseline 5G telecommunications technology.
Ericsson says it’s trying to renegotiate a license with Apple and is already encountering obstacles. It wants a federal judge to rule that Ericsson’s offer complies with requirements that royalty demands be fair and reasonable.
The two companies have been here before -- their earlier license was signed in 2015 only after protracted litigation. Then, Ericsson said, Apple filed a “surprise suit” challenging the validity of seven Ericsson patents and demanding that Ericsson provide proof for every single patent it claimed was part of an industry standard.
“Despite receiving substantial revenues from its sales of iPhones and other cellular devices, Apple has historically resisted licensing overtures by Ericsson, and other essential patent holders, as part of a global strategy to devalue standard essential patents and reduce Apple’s royalty payments,” Ericsson said in the complaint, filed in federal court in Marshall, Texas.
The dispute is over how much Apple should pay Ericsson for 5G connectivity and networking technology developed by the European Telecommunications Standards Institute.
Companies that collaborate to ensure devices are interoperable gain the advantage of ensuring that their inventions are included in any industry standard. As a result, they pledge to license any relevant patents on “fair reasonable and non-discriminatory,” or FRAND, terms, a phrase that’s never been clearly defined and has led to lawsuits and regulatory investigations worldwide.
Apple, which reported $232 billion in revenue and $74 billion in net income in the nine months ended June 26, has a history of high-stakes litigation as part of licensing negotiations, particularly with companies like Ericsson, Nokia Oyj and Qualcomm Inc. that own vast swaths of patents on foundational cellular technology.
Ericsson said it’s publicly announced its royalty rates for 5G technology to handset makers, but Apple has argued that the rate doesn’t meet Ericsson’s obligations.
“Apple’s allegations of breach threaten Ericsson’s reputation and business,” the Stockholm-based networking company said in the complaint
Officials with Cupertino, California-based Apple didn’t immediately respond to queries seeking comment.
The case is Ericsson Inc. v. Apple Inc., 21-376, U.S. District Court for the Eastern District of Texas (Marshall).
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