Under the settlement agreement, the companies have entered into a non-exclusive, worldwide, royalty-bearing license agreement covering all of ITC's patents for GSM, TDMA (D-AMPS), GPRS, EDGE and PDC. Additionally, all claims asserted in the patent infringement litigation are dismissed. In exchange, Ericsson will make an annual payment of a limited fixed amount through 2006 for sales of covered infrastructure equipment.
The royalty payments are part of a settlement of a dispute and will not significantly affect Ericsson's earnings. The agreements cover both past and future sales of the relevant products.
At the same time, Sony Ericsson and ITC have entered into a similar license agreement concerning handsets, under which Sony Ericsson will pay royalties to ITC through 2006.
For sales through December 2002, Ericsson and Sony Ericsson will pay ITC approximately USD 34 million. For the years 2003 through 2006, Ericsson will pay ITC an annual fee of USD 6 million for sales of infrastructure equipment. Sony Ericsson will, for the years 2003 through 2006, pay a royalty on each licensed product sold.