A US judge has handed down a fair, reasonable and non-discriminatory (FRAND) licence for standard-essential patents (SEPs) in a high-profile quarrel between telecoms company Ericsson and TCL, a China-based smartphone maker. Royalty rates fixed as under:
A running royalty for End User Terminals Sold beginning January 1, 2018 according to the following schedule:
For each such product Sold that is compliant with GSM, GPRS, or EDGE (but not compliant with WCDMA, HSPA, and/or 4G), 0.164% of the Net Selling Price if sold in the United States, 0.118% of the Net Selling Price if sold in Europe, and 0.090% of the Net Selling Price if sold anywhere in the world other than the United States or Europe;
For each such product Sold that is compliant with WCDMA or HSPA (but not compliant with 4G), 0.300% of the Net Selling Price if sold in the United States, 0.264% of the Net Selling Price if sold in Europe, and 0.224% of the Net Selling Price if sold anywhere in the world other than the United States or Europe;
For each such product Sold that is compliant with 4G, 0.450% of the Net Selling Price if sold in the United States, and 0.314% of the Net Selling Price if sold anywhere in the world other than the United States. Should TCL purchase TCL End User Terminals from a Third Party claiming to be licensed or to have pass-through rights under Ericsson Licensed Patents that confer a license covering the End User Terminal, then TCL will receive credit for that pass through license in the royalty rates applied. In particular, with regard to Ericsson Patents that are essential to the WCDMA Standards (“Ericsson WCDMA Licensed Patents”) for the Selling of ASICs, then TCL may have the option of remaining unlicensed by Ericsson under such Ericsson WCDMA Licensed Patents subject to Selling TCL End User Terminals with ASICs that are compliant with the WCDMA Standard. TCL shall then pay a royalty equal to the rate paid for the GSM/GPRS/EDGE and/or LTE Standards as specified in Clause E(3)(a) or Clause E(3)(c) of this Injunction, as applicable, for each such TCL End User Terminal provided that such TCL End User Terminal is also compliant with any of the GSM/GPRS/EDGE Standards and/or LTE Standards while it is qualified as a WCDMA End User Terminal. For the avoidance of doubt, the Parties acknowledge the doctrine of patent exhaustion. Ericsson confirms that upon the Effective Date it has not provided any licenses with pass-through rights under its 4G patent portfolio to a chipset provider, making, using, importing, selling, or otherwise disposing of 4G compliant chipsets and components. For the avoidance of doubt, TCL shall only be required to pay the highest prevailing royalty rate under this Injunction for each End User Terminal. For example, the 3G royalty rate for 3G multimode End User Terminal includes the royalty rate also for the 2G part in such End User Terminal.