Apple And Ericsson In Legal Battle Over Patent Royalties
Tech companies Apple and Ericsson are engaged in a heated legal battle over royalties and patents. Just recently, Apple filed a lawsuit in the US District Court for the North District of California, claiming that while it utilizes Ericsson's LTE technology in its devices, it does not agree that patents related to that technology are essential to cellular operation. Furthermore, Apple believes the patents fetch too much in royalties.
Soon after Apple filed its lawsuit, Ericsson also filed its own complaint in the US District Court for the Eastern District of Texas, requesting that the court issue a ruling on whether or not Ericsson's licensing terms and conditions are fair.
Ericsson has secured fair, reasonable, and nondiscriminatory (FRAND) status on some of its patents related to LTE technology used by Apple in its iPhone devices. While the two companies previously had an agreement between them, Apple has been in a legal spat with Ericsson over the last couple of years. Apple claims that the FRAND license extension it was expected to sign is not at all fair,.
A company that owns a FRAND technology is expected to provide its product (or component of the product) to another company under fair and reasonable terms. In legal terms, a FRAND technology is standard and essential to the continuing operation of a specific product. Thus, companies with such patents are generally not permitted to overcharge on licenses.
Interestingly, Apple has been involved in a legal battle involving FRAND technology before. Some might remember the company's patent battles with South Korean phone maker Samsung over mobile technology. That time, Apple also argued that the licensing charges were too high.
Apple has stated on record that it is willing to pay the right price to secure the rights to standard-essential patents. But in the case of Ericsson's patents, Apple does not consider them as standard and essential. If they are declared as such by the court, Apple wants a definite ruling on how much the royalties will be.
With regards to Ericsson's licensing fees, Apple says that Ericsson computes royalties based on a percentage of the total price of the devices that use the technology. Apple thinks that the royalties should be based only on the cost of the chip it has acquired from Ericsson. No more, no less.
Ericsson, who has 35,000 granted patents to date, believes that it has consistently done fair licensing deals with more than 100 companies in the industry. And it stands by its belief that its royalties are just and right.