Ericsson Settles Patent Lawsuits With Apple

Ericsson (LSE: 0O86.L - news) , a Swedish telecoms giant, has finalised a seven-year licensing agreement with Apple (Swiss: AAPL.SW - news) - after alleging its patented technology had been used in iPhones and iPads without consent.

The deal brings pending lawsuits in the UK, US, Germany and The Netherlands to an end.

Analysts had estimated that a verdict in Ericsson's favour could have cost Apple (LSE: 0R2V.L - news) up to £4.7bn in annual royalty payments, based on recent levels of handset sales.

Although the terms of this global licensing agreement remain confidential, it is believed the US giant will instead pay about 0.5% of the revenue it receives on smartphones and tablets.

The settlement is expected to have a "positive effect" on Ericsson's earnings - as Apple is due to make an initial payment before committing to ongoing royalties.

While it no longer makes mobile devices, Ericsson expects to generate as much as £1.1bn from intellectual property rights this year, compared to the £770m it made in 2014.

Under the deal, both businesses are set to co-operate more closely in the future, namely on the development of the 5G radio network and video traffic optimisation.

Ericsson has more than 35,000 technology patents, and is considered as one of the leading manufacturers of equipment for mobile networks (Other OTC: UBGXF - news) .