ZTE, Ericsson End Patent Dispute

A sharp fall in ZTE's share price Thursday forced the Chinese vendor to reveal it had settled a mobile technology patent dispute with Ericsson.

The two companies have signed a global cross-licensing agreement and agreed to withdraw their lawsuits filed in European courts and China, ZTE noted in a statement issued late Thursday.

ZTE denied rumors it had lost the case and would pay Ericsson a €500 million (US$646 million) indemnity charge and an annual €150 million ($194 million) license fee.

But by the time it issued its announcement, ZTE's stock had dipped by as much as 12 percent during the day Thursday to HK20.90, its lowest level in months, and closed the day at HK22.05, down more than 7 percent. It recovered to close Friday at HK$22.55, up nearly 2.3 percent.

The two companies had been in negotiations on a licensing agreement since April 2011, when Ericsson attempted to force the pace by filing suit against ZTE UK for alleged unauthorised use of its technology in several handsets. (See Ericsson Sues ZTE Over IPR Theft.)

Ericsson Intellectual Property Officer Kasim Alfalahi said at the time that ZTE had long been using the Swedish firm's technologies and that Ericsson had been seeking a licensing deal for four years.

Ericsson also filed against ZTE's Germany subsidiary, claiming up to €13 million ($16.8 million) in damages, and against ZTE Italy.

ZTE filed a countersuit with China's State Intellectual Property Organization (SIPO).

ZTE's statement said that, following further talks, the two companies "have agreed to withdraw all patent infringement litigations" in Europe and China. Now the companies are awaiting approval from the courts of their applications to terminate the litigation.

News of the settlement comes a week after Ericsson said it would strengthen its IPR licensing business by having Alfalahi report directly to CEO Hans Vestberg. Ericsson has 27,000 patents and raised a net SEK4.6 billion ($676 million) from licensing in 2011. (See Ericsson Puts Focus on IPR Licensing.)

With only three weeks gone, 2012 has already been awash with patent litigation news. (See Adaptix Sues LightSquared, NSN , Moto Wins a Round vs. Apple and Intellectual Property Boom.)

— Robert Clark, freelance editor, special to Light Reading

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