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Apple Agrees To Pay Ericsson A Part Of Profits Generated From Device Sales

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Apple Inc. has reached a consensus agreement with the Swedish telecom giant, Ericsson over patent infringement issue after two years of court battles. As per the new agreement, Apple has to pay royalty fee to Ericsson for the next seven years on every iPhone and iPad it sells in the market.

A part of the revenue generated by sale of Apple’s flagship products will go to Ericsson, the Swedish company announced.

According to estimates this amounts to about 0.5 percent of the revenue garnered from profits. The patent infringement issue has been rife since three years, with the two companies refusing to budge either ways. Ericsson had first filed a patent infringement law suit back in February, 2015 with the International Trade Commission, the U.S. District Court in Texas, the U.S. District Court in California, and courts in the U.K., Germany and the Netherlands.

Apple had summoned its response and took Ericsson to court over exorbitant patent fees back in January.  Ericsson reacted immediately and filed a suit with the International Trade Commission urging to stop the sale of iPhone in the US.

Ericsson claimed that Apple products, namely the iPhone and iPad were in clear violation of 41 patents under the company’s name. The patents mostly dealt with GSM, UMTS and LTE technologies.

The new agreement seems to have resolved claims raised by both parties. Henceforth, Apple will be working closely with Ericsson for developing the 5G technology, video networks traffic management and network optimization.

In a similar issue, Samsung had struck a deal with Ericsson and agreed to pay a percentage for using telecom technology patented by the Swedish company in 2014.

Ericsson is a global leader in terms of patenting wireless technology. The Swedish company holds over 35,000 patents in telecommunications technology. As a result most mobile phone producers hold licensing agreements with the company. The company generates huge revenues solely on the patent fees, with current estimates for the year putting the numbers at $1.5 to $1.6 billion.

According to an estimate by UBS, Ericsson will benefit hugely from this agreement with Apple. The company’s profits will increase by almost 10 percent in the coming year, which amounts to more than $3.4 Billion in just licensing fees.

Ericsson, however, has not released any data about the profits it will generate from its deal with Apple.

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