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No Agreement between Apple and Ericsson Leads to Lawsuits

Last month we reported that the Indian High Court had banned Xiaomi from selling, importing and advertising smartphones in their country. In that case it was Ericsson who brought a lawsuit against them regarding Essential Patents. Today it's being reported that Apple and Ericsson are suing each other after failing to reach an agreement over pricing of wireless patents used in Apple's iPhone and iPad.


According to Bloomberg, "Apple, saying that Ericsson is seeking excessive royalty rates, yesterday asked a federal court in California to rule that Ericsson's patents aren't essential to long term evolution, or LTE, standards. Stockholm-based Ericsson said today it filed a complaint in a district court in Texas, asking for a verdict on whether its fees are fair.


While Apple's iPhone and iPad have won over users in recent years, Ericsson helped pioneer the mobile-device market with its handsets in the 1990s. The company sold its mobile-phone business to Sony Corp. in February 2012, five years after Apple introduced the iPhone.


Apple reportedly stated in their formal complaint before the court that "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."


At the core of the dispute is Apple's contention that Ericsson wants Apple to pay royalties based on percentage of the price of the entire device. Apple argued it should be set on a smaller base and called Ericsson's demands unreasonable.


Kristin Huguet, an Apple spokeswoman, said in an e-mailed statement that "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."


When Nokia sold their handset business to Microsoft they retained their patents and the fear was that they were going to become a patent troll as noted in a Yahoo! News report back in December. The report noted European Commission's Joaguin Almonia starkly stating that "If Nokia were to take illegal advantage of its patents in the future, we will open an antitrust case." And yet Apple was sued by a patent troll in September who was using Nokia patents. Nokia was likely fully aware they were selling patents to a troll for the sole purpose of suing industry players making phones.


So it appears that Ericsson is taking a similar tactic. They sold their handset business that was a failure to Sony but kept their valued patents assets to act as a patent troll. So this is going to be a very interesting case to follow as both Nokia and Ericsson who failed to compete in the market place as handset makers, due in large part to Apple and Samsung beating them fair and square, are trying to win in the courts with patents alone as a patent trolls.


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