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InterDigital and Ericsson settle patent dispute

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.


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