Ericsson and Samsung have reached a multi-year global patent license agreement for cellular technologies including 5G, marking an end to related legal disputes between the two.
The settlement is a positive for Ericsson, which took a hit to Intellectual Property Rights (IPR) licensing revenue in the first quarter thanks in part to then-unresolved contract renegotiations with Samsung.
As a result of the IPR deal with Samsung, Cowen analysts anticipate faster resolution of Ericsson’s other outstanding expired patent license agreements given the South Korean vendor’s “lead steer status.”
“In addition to likely impacting timing of overall resolution of IPR renegotiations tied to 5G, the new agreement with Samsung also largely address the future impact of these IPR contract renegotiations given Samsung’s position as the largest 5G handset supplier,” wrote Cowen analysts led by Paul Silverstein.
The new cross-license agreement between Samsung and Ericsson covers sales of network infrastructure and handsets from January 1, 2021. Details of the deal were not disclosed.
Cowen said it shouldn’t have a meaningful impact on Ericsson’s IPR revenue for the year but could impact quarterly results.
Ericsson expects second quarter IPR licensing revenues – including two quarters of sales covered in the Samsung contract – to be SEK 2 billion to SEK 2.5 billion ($240.3 million to $300.3 million). In Q1 IPR revenues had fallen to SEK 0.8 billion ($96.1 million).
The Swedish vendor warned patent revenue would still be impacted by other factors, including geopolitics affecting the handset market, the shift from 4G to 5G and potential currency effects.
Still, Ericsson expressed confidence in growing IPR revenues long-term, noting its IP portfolio includes more than 57,000 patents and Ericsson invests around SEK 40 billion ($4.8 billion) in R&D annually.
“We are delighted to sign a mutually beneficial agreement with Samsung,” said Christina Petersson, Chief Intellectual Property Officer at Ericsson, in a statement. “This important deal confirms the value of our patent portfolio and further illustrates Ericsson’s commitment to FRAND principles.”
Samsung declined to comment and referred back to Ericsson’s press release.
Beyond the licensing contract, the vendors agreed to cooperate on technology products to advance open standards in the mobile industry.
The settlement puts an end to lawsuits Samsung and Ericsson had against one another spanning multiple countries. In the U.S. it also ends respective complaints the vendors filed with the U.S. International Trade Commission (USITC), as well as lawsuits in district courts.