Apple To Be Investigated for iPhone-Related Patent Violation
The U.S. International Trade Commission (ITC) has decided to launch a formal investigation into a pair of complaints filed by Swedish telecom giant Ericsson against California-based Apple charging that the iPhone maker violated its patents.
The battle began in January when a license agreement covering Apple’s use of Ericsson patents on LTE high-speed wireless technology expired and Apple complained in federal court that the patents “are not essential” for LTE technology and that the rates Ericsson wanted to extend the contract were “excessive.”
Ericsson is seeking a percentage of overall device sales, while Apple wants to pay rates based on the components in which the patents are used. The Swedish company counter-sued two days later, alleging Apple had infringed the patents and that the price was fair, reasonable and non-discriminatory—the requirement for patents used in industry standards.
According to Apple, “Ericsson seeks to exploit its patents to take the value of these cutting-edge Apple innovations, which resulted from years of hard work by Apple engineers and designers and billions of dollars of Apple research and development—and which have nothing to do with Ericsson’s patents.”
Ericsson has responded saying that it has “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 Apple on a fair rate for their patents, so, as a last resort, we are asking the courts for help.”
Should the ITC agree with Ericsson’s complaints, the company could pull in an estimated $250-750 million per year in royalties, depending on Apple’s sales and the exact royalty rate. If the Commission backs Apple’s contentions on the basis that royalties are owed, that would substantially shrink Ericsson’s share of an extended contract.