Ericsson Sues Samsung Over Patent Licensing, Alleging Breach of FRAND Commitments

Ericsson, a networking and telecommunications company, filed a complaint on Thursday in the Eastern District of Texas against defendants Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Research America, alleging that Samsung has breached its FRAND and other commitments.

According to the complaint, “Ericsson develops infrastructure equipment that makes up on the backbone of modern networks; that is, the base stations and cell tower equipment that mobile phones communicate with” and numerous mobile network operators buy services from Ericsson. As a result of its research and development efforts, Ericsson claimed it has been awarded “more than fifty-four thousand patents worldwide.” Ericsson noted that its patents are “essential to” 2G, 3G, 4G, and 5G “telecommunications standards, which are used by Samsung’s products.”

Ericsson asserted that it grants licenses for its essential patents in order for various entities to use these standards on fair, reasonable, and non-discriminatory (FRAND) terms. Ericsson stated that it utilizes “a reciprocal license to a potential licensee’s Essential Patents to cover Ericsson’s cellular commitment.” The plaintiff noted that it has licensed its essential portfolios with many telecommunications industry members, who pay Ericsson royalties for a global portfolio license, and that Samsung has agreed to similar FRAND obligations.

Ericsson contended that both parties have previously entered into global cross-licenses covering patents relating to 2G, 3G and 4G standards in 2014. The plaintiff claimed that in February 2019, before the cross-license expired, it initiated negotiations with Samsung for a new license. Under this proposal for a global cross-license, each would license the other’s Essential Patents and “(b)oth Samsung and Ericsson understood that Samsung would owe Ericsson a substantial balancing payment as part of the cross-license…consistent with the value of Ericsson’s Essential Patents as compared to Samsung’s.”

Ericsson asserted that these terms were consistent with FRAND terms, but Samsung did not accept the proposal and that Samsung’s counterproposal “evidenced Samsung was not negotiating in good faith towards a cross-license on FRAND terms.” In particular, according to Ericsson, “Samsung insisted it would only be willing to cross-license if Ericsson agreed to accept a royalty for Ericsson’s Essential Patents significantly below FRAND rates. By insisting Ericsson accept a balancing payment in a global cross-license substantially less than the value of Ericsson’s Essential Patents, and less than FRAND.”

Consequently, Ericsson averred that Samsung violated its FRAND commitment “by effectively depriving Ericsson of its right to a reciprocal license to Samsung’s Essential Patents on FRAND terms.” Moreover, Ericsson contended that as a third-party beneficiary of Samsung’s FRAND commitment to the ETSI, it has a right to enforce these commitments.

Ericsson has sought for the court to adjudge and declare that Samsung has not satisfied its reciprocity obligations, failed to comply with FRAND commitments, and breached its duty to negotiate in good faith.

Ericsson is represented by McKool Smith, P.C.