Our commitment to standardization can be seen in our strong out-licensing program, which has generated over $1 billion in annual global revenue from patent licensing in recent years. This income stream is a crucial component of the company's business model.
This dual role as both a major licensor and licensee provides Ericsson with a balanced perspective on Fair, Reasonable, and Non-Discriminatory (FRAND) licensing. Ericsson aims to foster an environment that both incentivizes the contribution of the industry's best technology to standardization and promotes the widespread adoption of that standardized technology.
Ericsson’s balanced view of FRAND has been validated by courts
Ericsson seeks to resolve its patent licensing disputes in good faith and, whenever possible, outside of the courtroom, as seen in the over one hundred patent license agreements the company has entered into without resorting to litigation.
However, there remain occasions when Ericsson must assert its rights in court. In these instances, the company's approach to Fair, Reasonable, and Non-Discriminatory (FRAND) licensing has been thoroughly considered and ultimately validated by the legal system.
A key example of this is the case of HTC v. Ericsson. The United States Court of Appeals for the Fifth Circuit found that Ericsson had offered fair terms to the plaintiff handset maker, HTC, for licenses covering standard-essential patents for 4G cellular technology. The court acknowledged that comparable licenses are an informative tool for determining FRAND compliance. The Court of Appeals affirmed the lower District Court's conclusion, which stated that "based on the whole of Ericsson’s submitted comparable licenses, both of Ericsson’s offers to HTC — $2.50 or 1% with a $1 floor and a $4 cap per 4G device — were fair, reasonable, and non-discriminatory.
Ericsson’s work with international bodies to improve the FRAND ecosystem
As a founding member of ETSI, we've been involved in shaping technology standards from the very beginning. In that time, we've consistently put forward ideas to help clarify and develop what it means to license technology on fair, reasonable, and non-discriminatory (FRAND) terms.
Some of the concepts we championed are now central to the current understanding of FRAND, like ensuring royalties truly reflect the value of the technology being licensed and affirming that injunctions should be available when necessary. We've also taken the initiative to guide small and medium-sized companies, helping them navigate the complexities of the FRAND licensing landscape.