Ericsson and Samsung have reached an agreement on global patent licenses between the two companies. The cross license agreement covers patents relating to GSM, UMTS, and LTE standards for both networks and handsets. This is the second major cross-licensing agreement that Samsung signed in January. Previously the company inked a deal with Google.
This pact ends complaints made by both companies against each other before the International Trade Commission (ITC) as well as the lawsuits before the U.S. District Court for the Eastern District of Texas. The details of the agreement are confidential and will not be disclosed.
The agreement with Ericsson grants Samsung access to numerous standard-essential patents that are owned by the Swedish company and cover a wide range of products offered by Samsung. The cross-licensing helps Samsung to avoid lawsuits from certain other parties who believe that the South Korean giant infringes its patents relating to GSM, UMTS, and 4G/LTE standards. With the recently signed cross-licensing agreement with Google, Samsung now has access to patents of two very influential companies, which gives a lot of freedom and opportunities.
"We are pleased that we could reach a mutually fair and reasonable agreement with Samsung. We always viewed litigation as a last resort. This agreement allows us to continue to focus on bringing new technology to the global market and provides an incentive to other innovators to share their own ideas," said Kasim Alfalahi, chief intellectual property officer at Ericsson.
The agreement includes an initial payment and ongoing royalty payments from Samsung to Ericsson for the term of the new multi-year license agreement. The initial payment in the agreement will impact Ericsson sales and net income in Q4 2013 by SEK 4.2 billion ($646.1 million) and SEK 3.3 billion ($507.65 million) respectively. Ericsson expects that the initial payment in the agreement will impact Ericsson's operating cash flow in the beginning of 2014.