Ericsson said it had filed a lawsuit with the district court for the Eastern District of Texas, accusing Samsung of “violating contractual commitments to negotiate in good faith and to license patents on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions.”
Many common technological standards, such as Wi-Fi and Bluetooth, are protected by patents held by specific companies. In order for other manufacturers to use such essential technology the holders of such patents are obliged to grant licences on fair, reasonable and non-discriminatory terms — so-called FRAND terms.
In practice however negotiations over these licences sometimes leads to conflicts between technology companies.
Shares in Swedish telecoms manufacturer Ericsson tumbled on Friday after it announced it was suing South Korea’s Samsung, warning the dispute could see sales take a hit of over half a billion dollars in 2021.
In the first hour of trading on the Stockholm stock exchange, Ericsson’s share price was down around seven percent.
The financial impact of the litigation, coupled with delays to renewals of license agreements and market conditions, could negatively impact Ericsson’s operating income by between one and SEK 1.5 billion (roughly Rs. 1,307 crores) every quarter starting in the first quarter of 2021, the company said.
Ericsson, which is one of the leading suppliers of mobile network equipment alongside Finland’s Nokia and China’s Huawei, booked net sales of SEK 227.2 billion (roughly Rs. 1,98,027 crores) in 2019.