By Daisuke Wakabayashi and Juhana Rossi
Apple Inc. and the Swedish telecom equipment maker Ericsson are
suing each other in the U.S. in a dispute over royalties for
patents linked to high-speed wireless technology the iPhone maker
uses in its mobile devices.
In a complaint filed in the U.S. District Court for Northern
California on Monday, Apple said Ericsson is wrongly asserting that
its patents are "essential" for the "Long Term Evolution," or LTE,
wireless communication standard. Apple also claimed that Ericsson
is demanding excessive royalties for its LTE patents.
Ericsson responded by filing a claim in the U.S. District Court
for Eastern Texas to determine whether it has made "a fair,
reasonable and non-discriminatory" licensing offer to Apple for its
"standard essential" LTE patents.
"Every Apple smartphone or tablet that has cellular connectivity
needs our technology," said Kasim Alfalahi, Ericsson's Chief
Intellectual Property Officer.
Mr. Alfalahi told The Wall Street Journal that Ericsson is now
seeking the court's help because Apple has rejected its licensing
offers in negotiations that have lasted for two years.
"We've always been willing to pay a fair price to secure the
rights to standards essential patents covering technology in our
products," an Apple spokeswoman said. "Unfortunately, we have not
been able to agree with Ericsson on a fair rate for their patents
so, as a last resort, we are asking the courts for help."
The public version of Apple's complaint, which was redacted,
doesn't disclose the amount of money involved.
Ericsson's Mr. Alfalahi also declined to discuss the financial
aspects of the case. In 2013 Ericsson's licensing revenue was 10.6
billion Swedish kronor ($1.3 billion).
Apple said in its complaint that it has a 2008 licensing
agreement with Ericsson that covers many of the patents now subject
to dispute. That agreement is expected to expire shortly, said a
person familiar with the situation.
However, Mr. Alfalahi contradicted Apple's view and said that
"as of now, we don't have an agreement between the two
companies."
Also at dispute is the way any potential royalties should be
determined. Apple said royalties should be based on the value of
the chip that includes the LTE technology.
Ericsson is seeking royalties that are "connected to the value
our technology is providing" for the entire device, Mr. Alfalahi
said.
If Ericsson's patents are deemed essential and the court rules
Apple has infringed them, Apple said it wants the court to assign a
"reasonable royalty rate."
Patent and intellectual property disputes are common in the
mobile device and wireless technology industries. Apple and the
Finnish telecom equipment supplier Nokia settled a two-year-long
litigation in June 2011 after Apple agreed to pay undisclosed
compensation to Nokia.
In January 2014 Ericsson and Samsung Electronics Co. struck a
multiyear licensing agreement. The agreement involved an initial
payment of 4.2 billion kronor from Samsung to Ericsson. Ericsson
recognized 3.3 billion kronor of the payment as net profit.
Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com and
Juhana Rossi at juhana.rossi@wsj.com
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