Swift on the heels of a Texas jury ordering Apple to pay $532.9 million to a patent troll, the Swedish multinational tech giant Ericsson is also lodging complaints about patent infringement against the Mac- and iPhone-maker. On Thursday, Ericsson filed two complaints against Apple with the U.S. International Trade Commission and seven lawsuits in the U.S. District Court for the Eastern District of Texas.
The complaints allege that Apple is using 41 of Ericsson's patented technologies without proper licensing. In addition to damages, the complaints also ask the ITC to block imports of Apple products into the U.S.
Ericsson's actions come one month after the expiration of Apple's global license agreement for Ericsson's mobile technologies. Following that expiration, Apple filed a lawsuit in California seeking a ruling that it does not infringe upon Ericsson's patents. Ericsson also filed a suit in Texas last month seeking a ruling on its global licensing offer to Apple.
Royalties 'May Undermine Profitability'
The lawsuits filed Thursday are just the latest illustration of how competitive and complex the patent licensing atmosphere is for smartphone technologies.
A working paper published last year found that the potential patent royalties on a hypothetical $400 smartphone could exceed $120. That was almost as much as the cost for all the phone's components, the authors wrote.
"There has been significant recent focus on 'royalty stacking,' in which the cumulative demands of patent holders across the relevant technology or the device threaten to make it economically unviable to offer the product," wrote Ann Armstrong, Joseph J. Mueller and Timothy D. Syrett. "Thus, the smartphone royalty stack across standardized and non-standardized technology is significant, and those costs may be undermining industry profitability -- and, in turn, diminishing incentives to invest and compete."
Armstrong is vice president and associate general counsel at Intel. Mueller and Syrett are both attorneys with the law firm of Wilmer Cutler Pickering Hale & Dorr.
Ericsson Patents Cover 'Essential' Technologies
The potential costs of a smartphone's "royalty stack" took on real-life meaning again Tuesday, when a jury in the U.S. District Court for the Eastern District of Texas ordered Apple to pay $532.9 million to Smartflash, a Texas-based firm that sells no products but has several patents for data storage and access systems. The jury's ruling, which is likely to be appealed, found that Apple used those patented technologies without paying royalties to Smartflash.
In its latest complaints, Ericsson says its patents cover technologies that are "essential to the 2G, 3G and 4G/LTE standards" or are "critical to other non-standardized aspects of Apple's devices." The Swedish company said it made "several attempts" to negotiate a new global license agreement with Apple after the previous pact expired, and filed the lawsuits because Apple "refused all attempts."
"Apple's products benefit from the technology invented and patented by Ericsson's engineers," said Kasim Alfalahi, Ericsson's chief intellectual property officer. "Features that consumers now take for granted -- like being able to livestream television shows or access their favorite apps from their phone -- rely on the technology we have developed....Apple currently uses our technology without a license and therefore we are seeking help from the court and the ITC."
We contacted Apple for a response to Ericsson's lawsuit.
"With tens of thousands of innovative employees, Apple has deep respect for intellectual property," a spokeswoman told us. "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."
In other developments, Smartflash on Wednesday filed a new lawsuit against Apple in the same Texas court that heard its previous complaint. The new suit alleges that Apple devices not included in the previous case are infringing on Smartflash's patents.