Patents help facilitate the voluntary sharing of knowledge and technology. In exchange for sharing and enabling the enhancement of technological development, patent owners are awarded a limited period of reserved rights to ensure adequate remuneration. In contrast to industries in which patents are primarily used to exclude competitors from a market, patents play an active role in developing the telecommunications industry through standardization and licensing.
It is Ericsson's philosophy that licenses for patents essential to standards should be widely available at fair, reasonable and non-discriminatory (FRAND) terms, subject to reciprocity, to provide compensation to companies that have made substantial investments in the development of these standards. Our licensing terms for patents essential to a specific standard comply with the prevalent industry interpretation of FRAND, i.e. the basis is a reasonable maximum aggregate royalty rate to which each patent holder is entitled a proportion according to its relative share of all standard essential IPR. Ericsson has successfully made its essential patent portfolios widely available at FRAND terms.
Ericsson´s FRAND licensing programs are based on bilateral negotiations in which the potential licensee is presented with detailed analyses ("claim charts") from our large portfolio of essential patents, and given the opportunity to challenge the essentiality and validity of these. Based on feedback received through a large number of such negotiations, it is universally acknowledged that Ericsson´s owns the strongest GSM and WCDMA patent portfolios in the industry, second to none. We are confident that the same will be true for standards beyond 3G. For example, for the upcoming 3GPP Long Term Evolution (LTE) standard, Ericsson expects to hold a relative patent strength of 20-25% of all standard essential IPR. Ericsson believes the market will drive all players to act in accordance with these principles and to a reasonable maximum aggregate royalty level of 6-8% for handsets. Ericsson´s fair royalty rate for LTE is therefore expected to be around 1.5% for handsets.
Below, a selection of our licensing programs:
