Trusted Vendors? Ericsson Sues Samsung for Unpaid Royalties, Contract Disputes in Major Telecoms Row

Legal fees in the court dispute are set to hit the Swedish telecoms giant's operating revenues up to 1bn to 1.5bn Swedish krona each fiscal quarter from first quarter 2021, the company said. 

Swedish telelcom Ericsson has filed a lawsuit in the United States against South Korea's Samsung for allegedly breaching contractual agreements aimed at licencing patents and negotiating terms in good faith.

Samsung allegedly delayed payment of royalties from unlicenced periods, the company said in press release.

The lawsuit was filed in the US District Court for the Eastern District of Texas for licencing patents on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions, it stated.

According to the Swedish telecoms giant, the FRAND system was a "fundamental building block of a rich ecosystem that has allowed global cellular connectivity to scale to more than 8 billion interoperable connections".

Such conditions allowed intellectual property from contributors to be rewarded for investments in research and development (R&D) for each mobile generation, it added.

"Current geopolitical conditions are impacting handset sales volumes as is the shift from 4G to 5G handsets," the statement read.

The news comes after statements from company chief executive Borje Ekholm this week, where he warned against splitting the global telecoms industry amid the ongoing US trade war with China.

Speaking at an event on Thursday, the top exec said that banning telecom vendors from national networks could lead to a fragmentation of telecom markets and block efforts in 5G innovation amid reduced competition.

“We believe countries need to combine the consideration of national security with…openness for trade," Ekholm said, adding that such bans would "fragment the market" where interoperability in intellectual properties was needed.

The Swedish Post and Telecoms Authority excluded Huawei from future 5g mid-band spectrum auctions in November, triggering a court ruling blocking the agency's measures until further notice.

Samsung officials attended a Science and Technology Committee meeting in London in July, where they stated they could help the government's rip and replace efforts days before Huawei was banned from British 5G networks.

National telcos will also face hefty fines of up to 10 percent annual turnover for failing to remove all Huawei kit from networks by 2027 as stated in the UK's Telecommunications Bill 2020.

The ongoing US trade war has seen Chinese telecoms such as Huawei Technologies and ZTE, as well as over 100 Chinese tech and aerospace firms, hit by a US trade blacklist and trade restrictions on semiconductors manufactured with US technologies in recent months for alleged national security concerns.