InterDigital Communications, a wireless and product
platform design company, has ended a decade-long patent
infringement dispute with Ericsson and handset joint venture Sony
Ericsson Mobile Communications.
The patent and royalty settlement also established new financial
terms and royalty obligations for Nokia and Samsung.
Under the agreement, Ericsson and Sony Ericsson will pay about
$34m, based on sales of digital terminal and infrastructure
products through the end of 2002, while the handset venture will
also pay a royalty on each licensed product sold through 2006.
The settlement covers second-generation and 2.5-generation
digital technologies, such as circuit-switched GSM and
packet-switched GPRS. It excludes all products built on the 3G
standard.
The new royalty agreement with Sony Ericsson triggered a clause
in the patent licensing agreements of Nokia and Samsung, entitling
them to receive the same favouable conditions of other major
customers.
Nokia's royalty obligation for 2002 could be between $100m and
$120m, while Samsung's could be in the range of $22m to $27m. The
aggregate prepayment of royalties from Nokia and Samsung could
range between $180m and $220m.
Analysts doubt the patent settlement would have an effect on
handset prices for consumers and businesses.
"The settlement will add a few dollars to the cost of each
handset," said Chris Jones, an analyst with Canalys.com. "But Sony
Ericsson, which has been losing market share, can't afford to pass
on that additional cost to customers. It will keep a close line on
prices to remain competitive in the market."
The good news about the settlement, which had been looming over
the Swedish company for years, is that "Ericsson knows what it has
to pay and can move on", Jones said.