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Apple, Ericsson Trade Shots Over Mobile Patent Royalties

Apple contends that Ericsson's LTE wireless technology patents are not essential to industry cellular standards and that the company is demanding excessive royalties.

Reuters / Robert Galbraith

Apple and Swedish telecom equipment maker Ericsson are taking their dispute over mobile technology patent royalties to the courtroom.

Apple sued Ericsson on Tuesday, alleging that the Swedish company’s LTE wireless technology patents are not essential to industry cellular standards and that it is demanding excessive royalties for these patents. The iPhone maker said it has not infringed on the patents and does not owe royalties for them.

On Wednesday, Ericsson said it had filed a complaint in a a U.S. district court in Texas alleging that Apple’s license to use technology developed by the Swedish firm and used in many smartphones and tablet computers had expired, and that two years of negotiations had not led to a new deal.

Apple says Ericsson is seeking royalties for the LTE technology calculated as a percentage of the price of the entire smartphone or tablet. The royalties should be based on the value of the processor chip that includes the technology, Apple said in the lawsuit filed in a federal court in California.

If Ericsson’s patents are deemed essential and the court rules Apple has infringed on them, Apple said it wants the court to assign a reasonable royalty rate.

“We’ve always been willing to pay a fair price to secure the rights to standards essential patents covering technology in our products. Unfortunately, we have not been able to agree with Ericsson on a fair rate for their patents so, as a last resort, we are asking the courts for help,” said Apple spokeswoman Kristin Huguet.

Apple and Ericsson currently have a license agreement that covers many of Ericsson’s allegedly standard-essential patents. The agreement was signed in 2008 soon after Apple launched the iPhone, according to the court filing.

In its complaint, Ericsson wants the court to determine whether its license offer to Apple is fair.

“We have been trying to negotiate a new agreement. We came to the conclusion we needed the help of a third party,” Kasim Alfalahi, the company’s chief intellectual property officer, said.

Early last year leading smartphone maker Samsung agreed to pay Ericsson $650 million along with years of royalties to end a license dispute.

If the dispute with Apple also went Ericsson’s way, the U.S. firm would have to pay it between $250 million to $750 million annually, analysts said, based on estimates of levels of handset sales and royalty payments per phone.

(Reporting by Supriya Kurane, Olof Swahnberg and Dan Levine; editing by Gopakumar Warrier)

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