Ericsson accuses Samsung of swerving FRAND commitments for 2G-5G patents

The delay in contractual negotiations could set Ericsson back SEK 1.5 billion per quarter from 2021 onwards.
Written by Campbell Kwan, Contributor

Ericsson has accused Samsung of not adhering to its contractual commitments for various licensing patent agreements.

Raising a lawsuit at District Court in the United States, Ericsson claims the Korean tech giant violated contractual commitments by failing to adhere to fair, reasonable, and non-discriminatory (FRAND) terms and conditions. 

In Ericsson's legal complaint [PDF], the company said it is seeking to attain a declaration that it has complied with its FRAND commitment, and that Samsung has not. 

Samsung's FRAND commitment is a contract between Samsung and European Telecommunications Standards Institute, Ericsson claimed in the complaint, with the Swedish company saying it has the right to enforce this commitment as a third-party beneficiary. 

The application of the FRAND commitment in this instance is in relation to various global cross-licences that cover both parties' patents for 2G, 3G, 4G, and 5G cellular standards.

With several of the licensing deals set to expire next year and negotiations still ongoing, Ericsson said the payment of IP royalties may be delayed. In the event of delayed royalty payments and the potential costs of litigation, Ericsson predicted its operating income could decline by SEK 1-1.5 billion per quarter from 2021 onwards. 

In making this prediction, it also said "current geopolitical conditions" along with the shift towards 5G technology would lower the company's licensing revenue. 

The Swedish company did note, however, that it expected unpaid royalties to be recovered and recognised as revenue if the agreements are renewed.

As the two networking giants prepare to lock horns in court, market research firm Strategy Analytics touted that the Samsung Galaxy S20+ 5G was the best-selling 5G device by revenue for the first half of 2020, accounting for 9% of global 5G sales revenue.
The Galaxy S20 Ultra 5G was second, accounting for 8% of global revenue, while Galaxy S20 5G narrowly came third, taking up 5%. Huawei's P40 Pro 5G and Huawei Mate 30 5G came fourth and fifth, respectively, and also had a share of 5% in global revenue.

Together, Samsung's S20 trio were the top-selling 5G smartphones in the world, accounting for 22% of global 5G sales revenue.

While various companies released new 5G devices in 2020, many countries have yet to allocate high-band spectrum, and for countries where 5G is available, except for the United States, most 5G devices only support sub-6Ghz 5G and do not have mmWave capabilities. 

Related Coverage

Editorial standards