Ericsson filed a lawsuit in the US against Samsung, arguing the South Korean company violated contractual commitments over royalty payments and patent licences.
In a statement, Ericsson said it commenced legal action due to what it believes are breaches of Fair, Reasonable and Non-Discriminatory (FRAND) licensing terms and conditions, the system which allows access to IP under global mobile standards and rewards contributors for significant R&D investment.
Ericsson said “several licence renewal negotiations” may delay the payment of IP royalties, if they extend beyond the expiry of existing licences into an unlicensed period.
“Once renewed, unpaid royalties are expected to be recovered and recognised as revenue at the time of renewal,” the Swedish vendor added.
It also said geopolitical conditions were impacting handset sale volumes, as is the shift from 4G to 5G models.
In combination with delayed royalty payments and the cost of litigation, Ericsson said its operating income could be impacted by SEK1 billion ($117.8 million) to SEK1.5 billion each quarter from Q1 2021.
“The actual financial impact will depend on the timing, and terms and conditions of new agreements,” added Ericsson.
Ericsson and Samsung were last embroiled in a royalty dispute in 2012, which ended with the Korean vendor forking out $650 million to resolve the issue
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