Ericsson sued Samsung, Fierce Wireless reported. The lawsuit alleges that Samsung breached contractual commitments. It also alleges that Samsung failed to negotiate in good faith over patent licensing and related payments. Ericsson filed this lawsuit against Samsung in the U.S.
Samsung has violated its obligations for essential patent licensing under FRAND according to Ericsson. FRAND stands for Fair, Reasonable, and Non-Discriminatory. Ericson is seeking a declaratory ruling stating they complied with their own commitments.
Meanwhile, a spokesperson for Samsung said they will review the complaint. Samsung will take appropriate actions after the review.
In addition, royalty payments could be delayed. According to Ericsson, the payments for the intellectual property could be affected if renewal negotiations are not concluded.
Ericsson says they could see a financial hit between $118-$177 million dollars per quarter starting in 2021. This number comes from delayed royalty payments and costs of litigation. However, royalties for the intellectual property could be recouped. An agreement between Ericsson and Samsung must be renewed for this possibility.
Ericsson sued Samsung over essential patents
The complaint filed in the United States District Court says negotiations with Samsung have stalled. The complaint says the vendor tried to reach a global cross-license agreement. The essential patents of Ericsson and Samsung would be covered before expiring.
Both companies fund research for developing important technologies. These include 2G, 3G, 4G, and 5G which all are global standard. As a result, smartphones and other devices use these technologies.
After striking a multi-year agreement in 2014, for two years there was a patent dispute. Both Samsung and Ericsson sued each other before settling. The settlement saw Samsung paying millions to Ericsson
Ericsson tried to initiate negotiations in 2019. These negotiations looked to create a new license. The proposal covered global cross-license for both companies. The proposal also includes essential intellectual property and balanced payments agreements.
Ericsson spends between 4$ and $5 billion dollars a year on R&D. To clarify, Ericsson has 54,000 patents worldwide. These patents are essential. Ericsson then reinvests the royalty payments back into future technology standards.
Ericsson says Samsung rejected an offer back July 20, 2020. Unfortunately, Samsung rejected but made a counteroffer. However, Ericsson says the counteroffer “was unreasonably low”.
As a result, negotiations have made little to no progress. Ericsson asserts that Samsung has no intention of negotiating in good faith. Ericsson accuses Samsung of insisting on a below fair royalty payment. As a result, Samsung has deprived Ericsson of its rights to an equal global license, according to the complaint.
Ericsson sued Samsung in an attempt to remedy the situation.