By Anna Ringstrom
STOCKHOLM, Nov 27 (Reuters) - Ericsson, the world's biggest
telecom network equipment maker, said it was suing Samsung
Electronics Co for patent infringement after two years of talks
failed to yield a license agreement.
Sweden's Ericsson, which reckons more than 40 percent of the
world's mobile traffic passes through its networks, filed a
lawsuit in the United States saying Samsung had refused to sign
a license to use technology on terms it referred to as fair,
reasonable and non-discriminatory (FRAND).
"Ericsson has tried long and hard to amicably come to an
agreement with Samsung and sign a license agreement on FRAND
terms. We have turned to litigation as a last resort," Kasim
Alfalahi, chief intellectual property officer at Ericsson said
in a statement on Tuesday.
Alfalahi noted Ericsson has over 30,000 patents and more
than 100 license agreements with major players in the industry.
A surge in smartphone and tablet computer sales has driven a
switch in traffic on telecoms networks from mainly voice calls
to video and music, which take up more capacity.
But although data traffic is surging - smartphone
subscriptions alone are expected to rise to 3.3 billion by 2018
according to Ericsson's own figures - operators are finding it
hard to get customers to pay much extra, squeezing their
profits.
With Ericsson suffering a big drop in sales at its network
unit - down 17 percent in the third quarter - it is increasingly
turning to the courts to maintain its patent income, part of a
wider trend where big technology names are fiercely protecting
their intellectual property as global sales of tablets and
smartphones boom.
One lawsuit by Apple relating to patents resulted in a $1.05
billion jury verdict against Samsung, the world's largest cell
phone and television maker, in August.
An Ericsson spokesman declined to comment on the size of its
lawsuit.
Samsung said it will "take all necessary legal measures to
protect against Ericsson's excessive claims."
"Samsung has faithfully committed itself to conducting fair
and reasonable negotiations with Ericsson over the past two
years, but Ericsson has demanded prohibitively higher royalty
rates to renew the same patent portfolio," the South Korean
company said.
FRAND
Samsung is also embroiled in a legal war with Apple in more
than 20 disputes in 10 countries, with Apple alleging various
Samsung smartphone and tablet products infringed its patents.
"Ericsson now has plenty of material from Samsung's
litigations with Apple to quote in support of high FRAND royalty
rates and sales bans," said Florian Mueller, blogger and patent
expert who has advised Microsoft and Oracle in the past.
The Ericsson dispute concerns patented technology the
Swedish firm says is essential to several telecommunications and
networking standards used by Samsung's products as well as other
patented inventions that are frequently implemented in wireless
and consumer electronics products, the company said.
FRAND licensing terms are used for patents and technologies
that have become essential, often as an industry standard.
Ericsson says its FRAND licensing aims to give companies the
incentive to contribute technology to open standards and still
maintain royalty rates at a reasonable level. But the growth of
patent suits has added complication to FRAND licensing and some
tech companies have complained of inflated prices being proposed
by patent owners.
According to Ericsson's statement, the company spent $5
billion in 2011 on research and development that resulted "in
hundreds of patented inventions that are essential to the
standards that drive global communications," such as GSM, GPRS
and EDGE.
Ericsson's intellectual property right net revenues amounted
to 6.2 billion Swedish crowns ($938 million) in 2011.
The complaint is filed in the District Court for the Eastern
District of Texas, the district where Ericsson's U.S.
headquarters is located.
($1 = 6.6116 Swedish crowns)
(Additional reporting by Tarmo Virki and Miyoung Kim)
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