Ericsson and Apple apparently aren’t seeing eye to eye in 5G patent licensing negotiations, and the Swedish vendor wants a U.S. court to step in – to resolve the dispute and get ahead of what it sees as imminent litigation from the iPhone-maker.
The Swedish network equipment vendor filed a complaint against Apple Monday in the U.S. District Court for the Eastern District of Texas, asking the court to issue a declaratory ruling that Ericsson is indeed playing by the rules and prepared to offer Apple standard essential patent licenses on fair, reasonable and non-discriminatory terms (FRAND).
The complaint said that current negotiations signaled a dispute, related to how much money Apple should pay in royalties to use underlying 5G technology (that incorporates Ericsson patents) in devices, and based on Apple’s history, the vendor thinks litigation is likely.
It also asserts that Apple is admittingly trying to devalue Ericsson’s essential patents related to 5G so it can pay less to use them in products.
“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 told the court.
Ericsson and others pour money into R&D for technologies that are incorporated and help underpin global cellular standards, including 2G-5G. That intellectual property is then licensed for use by makers of things like smartphones, devices and cellular infrastructure that incorporate 5G.
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According to the October 4 complaint, Ericsson said that even before the first meeting on a new licensing deal for 5G patents, Apple publicly labeled the vendor’s licensing program as discriminatory, with royalty rates that violate FRAND and noted the device-maker committed to only licensing essential patents on its own terms and conditions.
The iPhone-maker also publicly disputed whether Ericsson would grant licenses in accordance with FRAND terms.
“Apple’s allegations of breach threaten Ericsson’s reputation and business,” Ericsson stated.
Those moves came after Ericsson in March 2017 publicly disclosed royalty rates for its 5G/NR essential patents, charging $5 per 5G multimode compliant handset, with a minimum of $2.50 per 5G handset for some low-priced devices.
Apple was aware of the royalty rates and chose to incorporate 5G non-standalone and standalone standards that use Ericsson technology in its devices. The two companies already had cross-licensing agreements, including for 2G, 3G, and 4G.
“For years, Apple has attacked Ericsson, and other essential patent owners, for allegedly violating FRAND,” Ericsson asserted, adding that it’s in Apple’s financial interest to devalue standard essential patents.
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It also called out one tactic of Apple, in evaluating individual licenses rather than agreeing to a global portfolio.
“Apple knows that it would take hundreds of millions, if not billions, of dollars and several human lifetimes to individually adjudicate infringement, essentiality, and validity of the thousands of essential patents owned by Ericsson, then individually value them, in dozens of courts worldwide,” the filing states. By doing do, Apple is threatening huge transaction costs so that patent owners accept lower or less than fair royalty rates for Apple, Ericsson asserts.
The vendor said it started talking to Apple in late 2020 to reach a new cross-license agreement.
During talks Apple stuck by its own commitments on licensing, as well as public claims that Ericsson’s practices violate FRAND.
“The negotiations made clear there is a dispute between Apple and Ericsson as to the essentiality, and value, of Ericsson’s essential patent portfolio,” Ericsson stated.
Based on Apple’s past activity, Ericsson said there's a legitimate potential of litigation from Apple over whether the vendor is willing to grant licenses on FRAND terms and conditions, claiming behavior in current negotiations mirrors how Apple acted ahead of reaching the 2015 licensing deal (which saw lengthy talks and litigation).
“During those negotiations, while Ericsson’s license with Apple was still in force, Apple filed a surprise suit against Ericsson attacking seven Ericsson U.S. patents as not essential and also seeking, in the alternative, a patent-by-patent FRAND adjudication,” Ericsson stated.
As part of the declaratory ruling, the vendor wants the court to determine that Ericsson’s complied with all obligations from standard-setting organizations 3GPP and ETSI.
Apple and Ericsson have each been wrapped up in patent disputes before. The smartphone maker had a notable years-long battle with Qualcomm related to royalties, which spanned multiple countries. It ultimately ended with both companies dropping all litigation against each other in 2019 and reaching a six-year license agreement.
In May of this year Ericsson and Samsung reached a multi-year global cross-license agreement, including 5G patents, which ended related legal disputes.