Ericsson files suit against Apple to prove FRAND compliance amid 5G licensing talks
Cellular technology firm Ericsson is looking to accelerate licensing negotiations for 5G technologies with Apple and on Monday filed a lawsuit seeking declaratory judgment that it fulfilled commitments to the European Telecommunications Standards Institute (ETSI) and is ready to deal under fair, reasonable, and nondiscriminatory (FRAND) terms.
Lodged with the U.S. District Court for the Eastern District of Texas, the action arrives as Ericsson and Apple hash out licensing agreements for Ericsson's standard essential 5G patents, technology allegedly used in the latest iPhone models.
Citing what is described as Apple's history of devaluing SEPs for its own financial benefit, Ericsson reached out to begin negotiations for a cross-licensing arrangement in late 2020, some three years after announcing its 5G royalty rates. Apple integrated Ericsson's solutions knowing those rates, the complaint reads.
As part of technical and business discussions typical of such deals, Ericsson supplied Apple with 100 claim charts demonstrating the strength of its SEPs. The parties met on Sept. 21, 2021, to discuss Apple's analysis of the information, which "made clear there is a dispute between Apple and Ericsson as to the essentiality, and value, of Ericsson's essential patent portfolio." Details were not disclosed, but it appears that Apple is once again playing hardball.
Apple in 2015 sued Ericsson for what it called excessive royalty rates on LTE patents. At the time, Apple's license of a batch of Ericsson SEPs was due to sunset. The Cupertino tech giant later declined to renew the contract and instead decided to sue on claims that the IP was non-essential, a move that triggered a legal barrage from Ericsson, a series of back-and-forth lawsuits which spanned two continents and involvement by U.S. regulatory bodies.
A detente was reached in December 2015, when Apple agreed to license 2G, 3G and LTE SEPs under a new contract. With that agreement is set to expire, Ericsson is seeking a renewal that will include licensing of 5G IP.
"Apple's conduct in this negotiation parallels its conduct in the parties' negotiations that preceded the 2015 cross license," the complaint reads. "During those negotiations, while Ericsson's license with Apple was still in force, Apple filed a surprise suit against Ericsson attacking seven Ericsson U.S. patents as not essential and also seeking, in the alternative, a patent-by-patent FRAND adjudication."
Ericsson points to an Apple legal document titled "A Statement on FRAND Licensing of SEPs," which was posted to the company's website in 2019. The disclosure, which details Apple's view of SEPs and FRAND licensing, illustrates the company's tactics to devalue IP, according to Ericsson. For example, Apple states that the royalty basis for a portfolio license "should be no more than the smallest salable unit [SSPPU] where all or substantially all of the inventive aspects of the SEP are practiced." This theory does not align with ETSI FRAND commitments, making it illegal, the filing alleges.
Apple's prior legal history with Ericsson and other patent holders (likely a reference to Qualcomm) presents a "legitimate prospect of imminent litigation and a justiciable dispute" regarding Ericsson's readiness to grant the 5G patents under FRAND conditions, today's filing alleges. As such, the company is seeking a judgment that it has met those qualifications.
Apple for its part has in the past argued against SEP abuse, which can result in significant financial payouts on per-handset or device royalties. While Apple's devices do use deemed standard-essential IP, patent holders who flout FRAND terms could unjustly benefit from the development of innovative technologies that make products like iPhone popular.
Along with declaratory judgments, Ericsson seeks attorneys' fees in its Texas action.