Leading communications and technology firm Ericsson ERIC recently decided to call a truce with technology behemoth Apple Inc. AAPL by inking a global patent license agreement that marks the end of a long-running acrimonious tussle in contemporary corporate history related to copyright infringement.
Ericsson had filed seven lawsuits against Apple regarding issues related to patents and intellectual property protection that are currently pending verdicts. Ericsson claimed that Apple had infringed its patents that were crucial for technologies required to run mobile devices. This legal battle was proving to be quite costly for Ericsson, which histoically obtains significant revenues from its intellectual property rights.
The agreement marks an end to the ongoing investigations, including U.S. International Trade Commission lawsuits pending in the U.S. District Court for the Eastern District of Texas and Northern District of California, lawsuits in the United Kingdom, Germany and the Netherlands. This agreement will likely resolve all pending patent-infringement litigations including a cross license related to protection of standard-essential patents (GSM, UMTS and LTE cellular standards) of both the companies.
Though exact terms of the contract have been kept under wraps, the seven-year agreement necessitates Apple to pay an initial amount to Ericsson, following which it will pay recurring royalties. Ericsson is content with these rulings and expects 2015 Intellectual Property Revenues to amount to SEK 13–14 billion including payments from Apple.
Encouragingly, keeping their past conflicts aside, Ericsson and Apple have decided to collaborate in multiple technology domains that will likely pioneer industry-shaping standards, going forward. Some of their ambitious future ventures include development of 5G cellular standards, optimization of existing wireless networks and improvement of video traffic. We believe the combined technological prowess and market knowledge of the companies will pave the way for new and improved services in the market, thereby significantly benefiting operators and customers alike.
Ericsson currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the industry at the moment include InterDigital, Inc. IDCC and AudioCodes Ltd. AUDC. Both stocks sport a Zacks Rank #1 (Strong Buy).
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