Ericsson said that it has signed a global license agreement with Apple, putting an end to a year-long patent infringement dispute between the two tech giants.
The Swedish-based mobile telecom maker said that it will be paid an initial amount by Apple on top of royalties on the wireless devices that the US company sells.
Shortly after the announcement was made shares in Ericsson surged 7%.
With around 37,000 granted patents, Ericsson is the largest holder of standard-essential patents for mobile communication.
The dispute began earlier this year after a previous global patent license agreement between Ericsson and Apple expired and renewal negotiations failed, with Apple dismissing claims of intellectual property infringement.
The Swedish company eventually went to the U.S. District Court for the Eastern District of Texas accusing the California-based firm of infringing patents on 2G, 3G and 4G network technologies and tension between the two firms quickly turned into a lengthy year-long legal battle.
However, the recently announced agreement ends all other ongoing infringement disputes between the two firms, including the ones in California, the U.K., Germany and the Netherlands.
Ericsson didn’t provide a detailed information on how much it expects to make from the deal, but did provide an estimate of intellectual property rights revenue for 2015, expecting anywhere between 13 billion and 14 billion Swedish krona (US$1.64 billion).
According to Reuters, investment bank ABG Sundal Collier said in a note to clients that it expects Apple to be charged approximately 0.5 percent on its revenue on iPads and iPhones from Ericsson.
Kasim Alfahali, Ericsson’s chief intellectual property officer, was quoted by the WSJ as saying: “A settlement outside of a court was definitely our preferred way,”
Adding: “We invest about 30 billion kronor ($3.51 billion) a year in research and development and license our patents to the whole industry. We expect fair returns to be able to continue to invest,”