Ericsson surges on patent license agreement with Apple

Shares in Ericsson surged on Monday after the Swedish telecom equipment maker settled a legal dispute with Apple Inc over mobile-device patents.

The agreement includes a cross license that covers patents relating to both companies’ standard-essential patents and grants certain other patent rights.

It also includes releases that resolve all pending patent-infringement litigation between the companies.

As part of the seven-year agreement, Apple will make an initial payment to Ericsson and, thereafter, will pay ongoing royalties.

Ericsson said specific terms of the contract are confidential but estimated full year 2015 revenue from intellectual property rights would amount to 13-14 billion Swedish crowns (£1.02bn-£1.10bn), including positive effects from the settlement.

The agreement ends investigations before the US International Trade Commission, lawsuits pending in the US District Court for the Eastern District of Texas and the US District Court for the Northern District of California, as well as lawsuits in the UK, Germany and the Netherlands.

In addition, the companies will collaborate in multiple technology areas, including the development of the next generation 5G cellular standards, the optimisation of existing wireless networks for the benefit of operators and users worldwide, and video traffic optimisation.

Kasim Alfalahi, chief intellectual property officer at Ericsson, said: "We are pleased with this new agreement with Apple, which clears the way for both companies to continue to focus on bringing new technology to the global market, and opens up for more joint business opportunities in the future.”

At 0940 GMT, Ericsson shares were up 7% to SEK84.20.