Apple By Ryan Whitwam Dec. 22, 2015 9:30 am
Swedish company Ericsson has been involved in telecom technology for decades, and consequently it has a mountain of patents. It has licensing agreements in place with a number of large mobile device makers, and now it can add Apple to that list. The company that spawned the most profitable smartphone maker has agreed to pay Ericsson about 0.5% of all iPhone and iPad revenue.
The exact value of the deal was not made public by Ericsson, but an analysis by investment bank ABG Sundal Collier is how we get to the 0.5% figure. That’s not a huge number all by itself, but Apple sells iPhones and iPads in such incredible volume that Ericsson is expected to increase its intellectual property earnings from $1.1 billion last year to $1.6 billion this year. Not a bad outcome for Ericsson.
The patent dispute has been ongoing since 2012. Ericsson’s patents are essential to 4G LTE technology, but also to the aging 3G and 2G standards. Most mobile companies have opted to simply pay Ericsson’s fees, but Apple said Ericsson’s demands were unreasonable. Since these are essential patents, it’s not like Apple could just design around them. Apple and Ericsson sued each other in January.
After a few months of grandstanding on both sides, everyone calmed down enough to hammer out a deal. And it seems like a pretty good deal for Ericsson. The first set of lawsuits were due to reach the courtroom this month, but these cases are notoriously complex. It might have been years before we had a resolution without a deal. Now that the patent dispute is worked out, the two companies can again collaborate on network and radio optimizations for future 5G technologies.