Apple (AAPL) Sues Ericsson (ERIC) Over Excessive Royalty Rates

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Apple Inc (AAPL) has reportedly sued Swedish telecoms firm Ericsson (ERIC) alleging that the company’s LTE wireless technology patents are not essential to long term evolution, or LTE standards, and that it is demanding excessive fees for these patents, Reuters reported.

“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,” Apple argues in its lawsuit filed in a federal court in California.

Ericsson is accused of seeking royalties for the LTE technology calculated as a percentage of an entire smartphone or tablet price. Apple believes that the royalty should be based on the value of the microchip that includes the LTE technology.

“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,” said Apple spokeswoman Kristin Huguet.

Ericsson meanwhile, says in its counter suit against Cupertino, filed in the US District Court for the Eastern District of Texas, that smartphones and tablets as we know them today would not exist without its high-speed 4G technology and inventions.

“Without LTE [4G] technology and Ericsson’s inventions… smartphones and other mobile devices would not be able to provide the constant on-the-go access to video, streaming media and gaming that we are accustomed to today,” the company said.

Reuters notes that Swedish telecoms equipment maker dominates the supply of 4G networks and has contracts with the top 10 global mobile phone operators.

Apple shares declined 0.98 percent to $108.98 in midday trading. Ericsson traded flat at $11.99.

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