Samsung Electronics Co., Ltd. (005930) and Ericsson announces patent cross licensing deal worth $650 million

Posted Jan 27, 2014

Samsung Electronics Co., Ltd. (KRX:005930) is going to pay Ericsson $650 million and years of royalties to end technology license lawsuits between them. Ericsson sued Samsung in 2012 over patent infringement involving technologies that are based on clearer voice transmission, touchscreen functionality, and network efficiency. Samsung made counter-claims.

Ericsson said that the initial payment will lift Q4 sales by 4.2 billion Swedish crowns ($652 million) and net income by 3.3 billion. Analysts are forecasting Q4 net sales at 65.1 billion crowns and net income of 4 billion.

It is unknown what royalties Samsung would be paying. Patent agreements generally cover between 4 and 7 years.

Samsung is also dealing with Apple in court about patent disagreements. Apple alleges that Samsung products infringe on their patents. Samsung also signed a licensing deal with Ericsson in 2001 that covers handset and network patents. That deal was renewed in 2007. In 2011, Samsung and Ericsson could not agree to terms after that deal ran out. Samsung accused Ericsson of demanding higher royalty rates to renew the same patent portfolio.

“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,” stated Kasim Alfalahi, Ericsson’s Chief Intellectual Property Officer.