By: Marialejandra Portal
October 24, 2022
Amid legal battles with Swedish telecommunications company, Ericsson, Apple has hit a roadblock in distributing their new iPhone model that was released in September. The lawsuits pertain to a cross-licensing arrangement of 5G technology, and Apples continued use of the technology despite the inability to reach an agreement. Due to the active patent infringement lawsuits, Colombia has become the first country to ban the sale of certain Apple products, such as the iPhone 14. Although the principal lawsuit against Apple is taking place in Texas, similar lawsuits have arisen in Germany, the United Kingdom, Belgium, and Brazil, further escalating tensions between the companies.
This is not the first time Apple and Ericsson have been on opposite sides of a legal dispute regarding the use of Ericsson’s patented technology. A similar dispute arose in 2012 regarding the expiration of the licensing agreement relating to the use of LTE, 2G, and 3G technology and Apple’s subsequent unauthorized use of the technology. Following a lengthy and high-profile public battle that spanned three European countries – Germany, the Netherlands, and the United Kingdom – and two courts in the United States, a settlement was reached in 2015. The settlement agreement consisted of a new seven-year licensing agreement, seemingly ending all animosity and opening a new chapter for the two companies. Although the exact terms of the agreement were not disclosed, in a press release by Ericsson, they stated that Apple would make an initial payment followed by payment of on-going royalties for the “global cross license for patented standard-essential technologies and . . . certain other patent rights.” A major part of the agreement that holds particularly relevant in the relationship between the companies today is the inclusion of collaboration in multiple technology areas going forward, namely 5G development.
The current dispute arose from similar facts to those of the 2012 matter – the expiration of a licensing agreement led to negotiations to renew the license, which were ultimately impeded by the inability to reach an agreement as to what both parties believed to be a fair royalty rate. In fact, the expiration of the 2015 settlement agreement that resolved the 2012 dispute led to the one at hand now. Given the fact that the companies have had a long-lasting relationship and have settled issues in the past, it is possible that a settlement agreement may be reached before the Texas lawsuit reaches trial in June of 2023, although there is no confirmation that any settlement talks are underway.
In the original complaint Ericsson filed against Apple in The United States District Court For The Eastern District Of Texas, Marshall Division, Ericsson counteracts claims made by Apple that they are in violation of FRAND, which refers to the practice of granting licenses that are fair, reasonable, and nondiscriminatory, and claim their “contractual commitment to the European Telecommunications Standards Institute (ETSI)” has been met. This legal battle has been particularly contentious as each side continues to accuse the other of impropriety in their negotiations – with Ericsson claiming that Apple improperly reduced royalty rates and Apple in response claiming that Ericsson utilizes “strong-arm tactics” to charge excessive royalties.
In what Apple believes to be a diversion tactic from the major lawsuit in Texas, Ericsson employed their previously used tactic of initiating numerous global lawsuits – including one in Colombia. The Colombian lawsuit has already reached a resolution, albeit a potentially temporary one. On July 7, 2022 the 43rd Circuit Court of Bogotá granted Ericsson’s request for an injunction and entered an order “prohibiting, inter alia, the import, sale, commercialization, and advertisement of allegedly infringing products.” Apple had made a press release which included Colombia as a location in which the iPhone 14 would be sold, even after the ban was announced, but the country has since been removed.
Apple now seeks to obtain an order by the Texas court for Ericsson to provide indemnification to cover the “financial consequences” of their actions in Colombia by covering lost profits from the region, which allegedly account for “approximately 0.2% of Apple’s worldwide sales.” Additionally, Apple claims that Ericsson is attempting to push them into settling before the trial, which would be a course of action identical to that taken in 2015, and in doing so is derailing the proceedings in Texas by chipping away at the court’s jurisdiction over the matter. While the Judge believesthat there might be pressure applied to Apple to settle, he found no reason as to why a Colombian ruling would impact a Texan court. Although counsel for Ericsson claims that the ruling in Colombia has no impact on their desire to try the case in Texas, based on the companies’ history together, it is difficult to imagine that the added pressure of international lawsuits will not impact any litigation and possible settlements in the United States.