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Ericsson Says Samsung Has It Over a Barrel

TYLER, Texas (CN) - Samsung refuses to renew an expiring license to Ericsson for several telecommunications patents after two years of negotiations, Ericsson says in Federal Court.

Telefonaktiebolaget LM Ericsson, of Sweden, joined its Plano, Texas, subsidiary in a pair of complaints against Samsung Electronics, Samsung Electronics America and Samsung Telecommunications America on Tuesday.

Samsung has allegedly refused to renew on the "same fair, reasonable and non-discriminatory [FRAND] terms that Samsung's competitors have previously accepted."

Over 40 percent of all mobile calls are made through Ericsson cellular network equipment, and the company holds more 30,000 patents worldwide, Ericsson says.

"Samsung previously licensed Ericsson's standard-essential patents in 2001 and renewed that license in 2007," the complaints state. "Samsung's license has now expired. Samsung has sold hundreds of millions of unlicensed cellular handsets, smartphones, tablet computers, and televisions since the expiration of its license, including its flagship Galaxy S III smartphone."

Ericsson adds: "These negotiations have been unsuccessful for the simple reason that Samsung refuses to pay the FRAND rate paid by its competitors for Ericsson's standard-essential patents. Instead, Samsung demands Ericsson renew its license at a rate that is a small fraction of the rate other similarly situated companies pay Ericsson. Samsung's refusal to pay a FRAND rate gives it an unfair competitive advantage over its competitors who have licensed Ericsson's patents."

Samsung has a track record of manipulating the amount of a FRAND rate based on whether it is the licensor or licensee, Ericsson says.

"The most recent example occurred when Samsung asserted its own patents, which it alleged were standard-essential against Apple," the complaints state. "At the trial of that matter in the United States District Court for the Northern District of California, Samsung asserted all companies implementing a standard in its products must seek out and accept a license on FRAND terms. Yet, when the tables are turned and Samsung finds itself in the position of being the prospective licensee, it now refuses to license Ericsson's standard-essential portfolio at FRAND rates."

Worse yet, Samsung has tried to influence this negotiation by refusing to issue Ericsson a license to its standard-essential patents on FRAND terms, Ericsson says.

Ericsson seeks actual and punitive damages for patent infringement and breach of contract. It is represented by Mike McKool with McKool Smith of Dallas.

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