Shweta Tambade
Ericsson, the multinational networking and telecommunications company, headquartered in Stockholm, has sued Samsung electronics and Xo Ltd over a patent dispute in Texas court.
According to Ericsson, “the company (Samsung Electronics) violated Fair, Reasonable, and Non-Discriminatory (FRAND) terms and conditions.”
On Friday , according to a statement issued by Ericsson the case will face the breaches of certain obligations by Samsung and “it seeks to obtain a ruling by the court that Ericsson has complied with it’s own commitments. “
Common technological standards, like Wi-Fi and Bluetooth, are protected by patents held by specific companies. These are used by other companies under Fair, Reasonable, and Non-Discriminatory terms (FRAND).
It allows manufacturers to use these common technologies owned by certain companies by obtaining licenses. According to Ericsson’s statement, it seems that Samsung has violated the terms of conditions.
As estimated by Ericsson the process risks reducing their operating income by as much as 1.5 billion krona (USD 178 million) next quarter, due to litigation fees. It also said that “current geopolitical conditions” are hampering the transition to 5G technology as a drag on the company’s income.
Many of Ericsson’s company licensing deals will expire next year. Ericsson says, while the agreements are renegotiated it faces a risk of delayed royalty payments. Its shares fell as much as 8.2% after trading started in Stockholm, the company’s biggest sink since March.
As Ericsson has filed a suit against Samsung, it would bare the financial effect the most.
Ericsson also said that this lawsuit can cost them about Rs 1,300 crores per quarter from 2021. Since the company depends heavily on its commissions from the patents it holds, so it is obvious if this case continues that is going to take a hit.
The lawsuit was filed in Marshall, Texas, a court known for being friendly to patent owners and its relative speed in handling disputes.
The case is Ericsson Inc. v. Samsung Electronics Co., 20-380, U.S. District Court for the Eastern District of Texas (Marshall).
