Ericsson Tries to Avoid Patent War by Publishing Rates for 5G

Ericsson Tries to Avoid Patent War by Publishing Rates for 5G

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Ericsson has taken the unusual step of publicly setting a price tag on what it will cost to license their technology for the next generation of high-speed mobile phone networks, according to Bloomberg.

Ericsson said it will cap royalties at $5 per phone for higher-end handsets, though it would go as low as $2.50 for less expensive devices. The company is being upfront about costs now so that more companies will want to develop products that incorporate the industry standard, said Gustav Brismark, Ericsson’s chief intellectual property officer. “We believe by setting a price that’s reasonable, it would serve as a reference to other patent holders and to other companies that need to take a license,” Brismark said in an interview.

Equipment makers, service providers, and handset makers are working together to develop the standards for 5G, which is scheduled to be commercially available by 2020 though could come sooner. Ericsson CEO Borje Ekholm in February predicted the market for fifth-generation mobile broadband services could reach $1.2 trillion and the company is seeking to capture as much of that as possible.

Since the companies developing a standard have a leg up on ensuring their technology is included, they pledge to license any relevant patents on “fair, reasonable and non-discriminatory” terms, a phrase that’s never been clearly defined. The companies are usually left to negotiate royalties sometimes without knowing what rivals are paying.

Another goal for Ericsson is to avoid some of the protracted litigation that’s marred licensing talks over past and current standards and brought unwanted attention from regulators throughout the world. Ericsson and Apple spent a year in courts in the U.S. and Europe before they were able to reach a licensing agreement in December. Ericsson also is in the midst of a legal dispute with China’s TCL over royalty rates.

Ericsson submitted the pledge to the European Telecommunications Standards Institute, the umbrella organization that’s developing the 5G standard, on March 3, a month ahead of an April 6 summit to discuss 5G network infrastructure. The Stockholm-based company spends about $5 billion a year on research and development. The royalty rate is only on the standard-essential patents and doesn’t include inventions to implement features that aren’t standardized.

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