Apple, Ericsson trade legal shots over patent royalties

Apple has sued Ericsson, arguing that the Swedish company is charging too much on royalties that are not "essential" to industry cellular standards.

Apple and Ericsson are now in the middle of a legal battle over patent royalties.

Apple and wireless technology company Ericsson have ramped up their ongoing fight over royalties and patents.

Apple on Tuesday filed a lawsuit in the US District Court for the North District of California, saying that while it uses Ericsson's LTE technology in its products, it does not believe that the patents related to that technology are essential to cellular operation and fetch too much in royalties.

Not long after Apple filed its patent lawsuit, Ericsson filed a complaint in the US District Court for the Eastern District of Texas, asking the court to issue a ruling on whether Ericsson's licensing terms are indeed fair.

At issue is fair, reasonable, and nondiscriminatory (FRAND) patent licensing. Ericsson has secured FRAND status on some of its patents related to LTE wireless technology that Apple uses in its iPhone smartphones. While the companies previously had an agreement in place, Apple has battled with Ericsson over the past two years, saying that the FRAND license extension it was expected to sign is unfair.

If a company owns a FRAND technology, it is expected to provide its product or component to another company on fair and reasonable terms. Under the rule of law, a FRAND technology is standard and essential to the ongoing operation of a particular product. Therefore, companies that own such patents are not allowed to gouge licensees.

"We have offered Apple numerous times licensing offers," said Gustav Brismark, Ericsson's head of patent strategy. "Since we have failed to come to a conclusion, this is why Ericsson has decided to go to a third party" to prove it is complying with FRAND requirements.

Apple didn't respond to a request for comment.

If FRAND sounds familiar, it's because it was a common buzzword during the never-ending patent battles between Apple and Samsung over mobile technology. At times, in Europe, especially, Apple took aim at Samsung's standard-essential patents, arguing that licensing fees were too high. Courts across the European Union were split over the argument, as dozens of decisions across Germany and elsewhere came in.

In a statement with the California court on Tuesday, Apple said that it's "willing to pay a fair price to secure the rights to standard-essential patents." However, Apple isn't convinced that the Ericsson patents, which relate to LTE technology that allows its devices to connect to cellular networks for data transfer, are standard and essential. If they are deemed to be so by the court, Apple wants its help determining royalties.

According to Apple, its main issue with Ericsson's licensing model is that it's based on a percentage of the total price of the smartphones. Apple believes the royalty should be based solely on the cost of the chip it's acquiring from Ericsson and nothing more.

In its response in the Texas court, Ericsson, which has 35,000 granted patents worldwide, said that it has reached fair deals with more than 100 companies in the industry.

"Our goal is to reach a mutually beneficial resolution with Apple," Ericsson Chief Intellectual Property Officer Kasim Alfalahi said in a statement on Wednesday. "They have been a valued partner for years, and we hope to continue that partnership. We believe it is reasonable to get fair compensation from companies benefiting from the development we have made over the course of the last 30 years."

Apple and Ericsson initially signed their patent-licensing agreement in 2008 -- one year after Apple launched its iPhone.

Featured Video