Samsung is already embroiled in a worldwide patent fight with Apple, but the company will now face a patent attack from another direction. Swedish telecom giant Ericsson sued Samsung today, saying the Korean company wouldn't renew a patent cross-licensing agreement after two years of negotiation.
Samsung refused a deal on terms that the rest of the industry has accepted, Ericsson representatives said today. The specific terms offered weren't disclosed, but documents show they were "Fair, Reasonable, and Non-Discriminatory," or FRAND. Just what constitutes a FRAND rate is very much in dispute right now, however, with multiple US federal courts and the US International Trade Commission considering the issue. Samsung licensed Ericsson's standards-essential patents in 2001 and again in 2007, but its license has now expired. "Samsung’s refusal to pay a FRAND rate gives it an unfair competitive advantage over its competitors who have licensed Ericsson’s patents," write Ericsson lawyers in today's filed lawsuit.
"Ericsson has over 30,000 patents and more than 100 license agreements with all major players in the industry. Ericsson has tried long and hard to amicably come to an agreement with Samsung and to sign a license agreement on FRAND terms. We have turned to litigation as a last resort," said Kasim Alfalahi, Ericsson's chief IP officer.
One possible problem for Samsung: in its patent battle with Apple, Samsung is also relying on patents that it has agreed to license at FRAND rates. Ericsson hits that point in its lawsuit, declaring that "Samsung has a history of manipulating its position on the amount of a FRAND rate depending on whether it finds itself as the licensor or licensee in a particular negotiation... when the tables are turned and Samsung finds itself in the position of being the prospective licensee, it now refuses to license Ericsson’s standard-essential portfolio at FRAND rates." Ericsson's lawyers continue: "Contrary to Samsung’s behavior, patent licensing under FRAND terms does not change from one day to the next depending on whether a company finds itself aligned as a licensor or licensee."
In fact, it's possible one reason negotiations collapsed is because Samsung is now in a position where it has to insist that its FRAND patents have a lot of value. After all, those are the patents it's using to fight back against Apple's patent attack.
But it's impossible to know. According to Samsung, Ericsson's licensing rates have simply gotten too expensive. In an e-mailed statement, a Samsung spokesperson said, “We have faithfully committed ourselves to conducting fair and reasonable negotiations with Ericsson over the past two years, but this time Ericsson has demanded significantly higher royalty rates for the same patent portfolio."
Ericsson filed two lawsuits, both in the Eastern District of Texas, alleging infringement of 24 patents in all (see lawsuit No. 1 and No. 2). While that district is famous as a place patent plaintiffs like to venue-shop, Ericsson's US headquarters is actually within the district (in Plano, Texas). The patents cover a wide array of technologies used in telephones, base stations, televisions, computers, Blu-ray players, cameras, and wireless devices, according to the complaints.
The Swedish company targeted networking equipment makers D-Link, Netgear, and Gateway in a separate patent suit filed in 2010. That litigation is ongoing and scheduled to go to trial in East Texas in mid-2013. It includes at least one patent also being used in the dual lawsuits against Samsung.
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