Samsung certainly doesn’t lack for courtroom enemies. As its patent war with Apple escalates, it now finds itself facing off with mobile infrastructure titan Ericsson, which is suing Samsung for allegedly infringing on its vast networking patent portfolio.
According to Ericsson, Samsung entered into a licensing agreement with Ericsson in 2001 for the latter’s 30,000 patents relating to technologies ranging from Wi-Fi to GSM and LTE. They renewed the agreement in 2007, but after failing to reach a third renewal agreement following two years of negotiations, Samsung let the deal expire, Ericsson chief intellectual property officer Kasim Alfalahi said in a phone interview.
Alfalahi said that Ericsson has more than 100 cross-licensing deals with vendors across the industry, all with similar terms it has offered Samsung. Ericsson’s suit, filed today in a U.S. district court in Texas, is demanding THAT Samsung pay licensing fees in arrears and damages for willfully infringing its patents. If Samsung refuses to accept new a cross-licensing agreement, Ericsson wants an injunction against Samsung selling any equipment based on its patents, Alfalahi said.
These kind of licensing dust-ups are part and parcel for the telecom industry, which relies heavily on standards to build global networks. Though no single company controls the standard itself, they do own patents to the individual technologies and techniques that make up the standard. Consequently no vendor can build a phone or design a network without using the intellectual property of multiple competitors.
To prevent a single patent holder or group of holders from mucking up the standard, vendors are supposed to cross-license their intellectual property under Fair, Reasonable And Non-Discriminatory (FRAND) terms. Obviously how FRAND is quantified can vary considerably depending on how each company values its own patents. The result has been a lot of blood spilled over licensing fees, as evidenced by the epic battles between Qualcomm and Broadcom in the last decade. The nastiness of those patent wars have led companies like Apple and Google to buy up the patent portfolios of faded wireless giants like Motorola and Nortel in order to bulwark their intellectual property defenses.
“Our patents give us a right to exclude others, but with open standards we have all committed to license openly,” Alfalahi said. “We feel confident that we have given Samsung an offer we feel is FRAND. We feel any judge is going to see our offer as FRAND.”
Samsung’s fight with Ericsson is different from its battle with Apple because instead of focusing on handset design it revolves around core wireless technologies; in particular, infrastructure, a field in which Samsung was a minor player for most of its history. Samsung, however, has been asserting itself in the networking space in recent years, breaking into both the U.S. and European markets with huge contracts from Sprint and 3 UK. Not only are North America and Europe traditionally Ericsson turf, but Samsung’s recent success means the stakes are higher for both companies. The more equipment Samsung sells, the more of its revenue it has to pay out to its licensors. And Samsung has some big ambitions. It recently made the rather audacious claim it will become the No. 3 infrastructure vendor in the world.
We’ve only heard from Ericsson on this spat, though we’ve reached out to Samsung for comment and will update this post when we hear back. The disagreement is likely much less one-sided than Ericsson makes it appear since these deals are never one-way licensing agreements. Samsung is still a major player in the wireless world and has a huge patent portfolio of its own. That means Ericsson has to license Samsung’s intellectual property as well. Expect to see a counter-suit soon.