Samsung claims Ericsson is demanding billions more for its patent licenses

Samsung Electronics claims that Ericsson demanded billions more for patent licenses after their license agreement expired in 2007.

The company made its claim in a document filed with the U.S. International Trade Commission (ITC) on Monday.

Ericsson wants the ITC to ban the import of Samsung’s Galaxy S III, Galaxy Note and Galaxy Tab 7.7, as well as other Samsung products including TVs. Ericsson alleged that the products infringe on its patents in a complaint filed with the ITC in December, shortly after it has filed two lawsuits against Samsung in the U.S. District Court for the Eastern District of Texas.

Technologies at issue relate to electronic devices for wireless communications and data transfer including radio frequency technology and standardized communication protocols including GSM, GPRS, EDGE, W-CDMA, LTE, and 802.11 Wi-Fi.

Ericsson started the litigation because it wants Samsung to pay licensing fees for patents the Swedish phone maker has declared essential to implementations of industry standards. Standards bodies usually require that such standards-essential patents (SEPs) be licensed on fair, reasonable and non-discriminatory (FRAND) terms. Companies however often disagree about what is a fair and reasonable price for licensing such patents.

In this case, Ericsson decided to start litigation on several fronts in the U.S. because the companies failed to reach a license agreement after two years of negotiations.

According to Ericsson, Samsung was asked to pay the same rate as its competitors, but Samsung refused. Samsung on the other hand said Ericsson demanded significantly higher royalty rates for the same patent portfolio.

“At trial, Samsung is prepared to show Ericsson’s offers to license its SEPs after the expiration of the parties 2007 license agreement are unreasonably high — seeking billions more than the previous license agreements — and that these offers are inconsistent with FRAND,” said Samsung in a document filed with the ITC.

In the same filing, Samsung also notes that the negotiations about the companies’ patent portfolios have occurred all over the world and are still ongoing. The dispute is about the appropriate royalty for the parties’ respective 2G, 3G, 4G and 802.11 standard essential patent portfolios, Samsung said, adding that it has made cross-license offers based on lump sum royalties and balancing payments.

“In those negotiations, Samsung has made multiple offers to Ericsson. While those offers apparently do not include enough money for Ericsson, they do reflect a vast and principled increase in licensing revenue from Samsung to Ericsson over the prior two licenses combined,” Samsung said, adding that this could not be characterized as a “refusal to negotiate.”

“Ericsson’s suggestion that the ITC could and should enter the business of setting unilateral FRAND royalty rates, on a portfolio-wide basis, for patent licensing companies like Ericsson — thus encouraging unwarranted SEP litigation in the ITC — is wrong,” Samsung said, referring to an earlier Ericsson filing.

The proper cause of action should be for Ericsson to terminate its SEPs from the ITC case, Samsung said.

Ericsson did not immediately respond to a request for comment.