Ericsson and Samsung reach a global settlement agreement, the end of the 5G patent drama!

On May 7, Ericsson’s official website announced that it had reached a global settlement agreement with Samsung, and signed a multi-year global patent licensing agreement between the two companies, which includes global cross-licensing of cellular technology-related patents including 5G technology. , the cross-license agreement covers the sale of mobile network infrastructure and mobile phones from 1 January 2021. This marks the end of all pending related patent legal disputes between the parties.

The annual drama ends in an instant, and the people who eat melons have no melons to eat!

In addition, Ericsson and Samsung have entered into a technical cooperation agreement on projects to develop open standardization in the mobile industry and create valuable solutions for consumers and businesses.

The settlement concludes complaints filed by the companies with the United States International Trade Commission (USITC) and pending litigation in several countries, and affirms the value of the companies’ strong patent portfolios. Details of the agreement are confidential and will not be made public.

Ericsson’s revenue from licensing of intellectual property remains affected by several factors, notably the expiration of pending patent license agreements, geopolitical implications for the handset market, technology transfer from 4G to 5G, and possible future currency generation effect. In the second quarter of 2021, intellectual property license revenue, including new agreements sold from January 1, 2021, is expected to reach SEK 2 billion to SEK 2.5 billion.

Christina Petersen, Chief Intellectual Property Officer, Ericsson, said: “We are delighted to have signed a mutually beneficial agreement with Samsung. This important transaction confirms the value of our patent portfolio and further confirms Ericsson’s commitment to licensing under the FRAND principle.”

For decades, Ericsson has invested heavily in research, development and development of global mobile standards and is committed to licensing standard, fair, reasonable and non-discriminatory (FRAND) patents to consumers and businesses in all countries. The FRAND system provides access to technology and intellectual property developed by inventors such as Ericsson and rewards those inventors for their large-scale and past investments in R&D for each mobile generation.

Ericsson’s intellectual property portfolio is worth more than 57,000 granted patents and invests around SEK 40 billion in research and development annually. With its global leadership in 5G, the company is confident of increasing IP revenue over the long term, thereby further maximizing the total value of its patent portfolio.

01 This is the end of the annual drama of the intellectual property industry

The patent litigation dispute between Ericsson and Samsung originated from the expiration of the patent licensing agreement between the two parties last year. Samsung did not recognize the patent licensing scheme proposed by Ericsson, so the two companies set off patent litigation in the two major markets of the United States and China.

This triggered another back-and-forth dispute between China and the United States over anti-suit injunctions and anti-prosecution injunctions. During this process, Wuhan Intermediate Court made a high-profile appearance after becoming famous in the battle between Xiaomi and InterDigital, successfully attracting Samsung. Such a heavyweight enterprise chooses the Chinese court as the home of the battle.

And Ericsson did not show weakness either. Using its powerful influence and connections in the United States, it just urged the US court to work overtime to issue an anti-prosecution injunction to Samsung during the traditional Christmas holiday of Westerners. The energy behind it is evident.

With the gradual deepening of the fight between the two sides this year, celebrities from the US government and legal circles have also been attracted to their respective companies.

For example, Judge Radar, a former U.S. Court of Appeals for the Federal Circuit, personally wrote an “amicus curiae” to the U.S. court in January this year, supporting the actions of the Wuhan court in China and Samsung, arguing that Samsung chose the Wuhan court in China and proposed Some of the requirements, Chinese courts have developed to have the ability to influence the world.

On the other hand, the first thing that former US Patent and Trademark Office Director Icun did after entering a law firm after leaving office was to send an “amicus curiae” to the court, fully supporting all Ericsson’s claims in the US court.

This was originally a future-oriented 5G technology, a very exciting annual intellectual property drama. With the deepening of the litigation between the two parties, there will be more court materials and judges’ opinions, and it may even be possible to make a license for future 5G patents. The event where the price is of decisive significance suddenly came to an abrupt end. It has to be said that it is a great regret for the people who “eat melon”, but for the two commercial companies, this seems to be expected. result.

02 Who won this dispute?

A settlement between the parties is a 100% expected outcome.

Although I hope to see a new set of standards that can be played, it did not appear as scheduled. Taking into account the past strengths and positions of both parties, and comprehensive judgment, both parties should make a step forward in the final reconciliation.

Ericsson’s Q1 financial report has just been released, and its description of intellectual property licensing can be described as “pretty dismal”. Ericsson also mentioned that Q1 did not meet expectations in intellectual property licensing, largely due to a relationship with a customer. The failure to reach a consensus on the patent licensing cooperation due at the end of the year eventually led to the lower-than-expected Q1 licensing revenue.

Perhaps it is because of this pressure that Ericsson can’t wait to mention in the official release that the expected license fee for the second quarter is about SEK 2.0-2.5 billion ($238-298 million).

Therefore, it can be conservatively estimated that most of Ericsson’s patent licensing fees in the second quarter may come from the settlement fee with Samsung.

Samsung may have paid at least SEK 2 billion, equivalent to $238 million.

Ericsson is one of the few companies in the world with annual patent licensing revenue exceeding $1 billion. In Ericsson’s 2020 financial report, the total revenue from intellectual property licensing was SEK 10 billion, or about $1.2 billion.

Therefore, the settlement with Samsung this time can be considered to have achieved 1/4 of the annual task, which is also a good deal for Ericsson, which has gradually weakened.

On the other hand, for Samsung, with Huawei’s withdrawal from the smartphone industry, the market shares of Samsung and Apple have gradually increased, especially in the future 5G technology, which is also included in the settlement agreement. Therefore, for Samsung, I am afraid this The benefits brought by the sub-reconciliation amount are more, and this can be made up for through market sales.

Compared with the $600 million patent license fee that Huawei just received in Q1, Ericsson’s $238 million is indeed not much. In contrast, it can also be seen that the positions of the new overlord and the old overlord in the communications industry are alternating.

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