The patent rat-race continues apace. Today Unwired Planet announced that it has purchased a portfolio of over 2,400 patents from the troubled Swedish mobile vendor Ericsson. The deal includes IP related to 2G, 3G and LTE technologies, and will give Unwired Planet significantly more ammunition in its various legal battles against Apple (x2), Google and RIM over patent infringements (one of the suits, against RIM and Apple, was dropped at the ITC but Unwired Planet intends to reopen it in Delaware).
Prior to this deal, Unwired Planet had 260 patents. The news has sent Unwired Planet's stock up nearly 20% on Nasdaq in after-hours trading.
The financial terms of the deal were disclosed in an 8-K form filed by Unwired Planet, and they are on a sliding scale that will depend on revenues that Unwired Planet makes from the patents in question. In effect, that now makes Ericsson a long-term beneficiary of Unwired Planet's own patent enforcing activities.
The full details from the 8-K:
In consideration for the Ericsson Transferred Patent Portfolio and the Additional Patents, UP will pay Ericsson the following portion of UP LLC's cumulative gross revenue on a quarterly basis in accordance with the provisions of the MSA (the "Gross Revenue Payments"): (i) 20% of the amount of Cumulative Gross Revenue, until the Cumulative Gross Revenue equals $100 million; plus (ii) 50% of the amount of Cumulative Gross Revenue in excess of $100 million, until the Cumulative Gross Revenue equals $500 million; plus (iii) 70% of the amount of Cumulative Gross Revenue in excess of $500 million. Revenue sharing may be adjusted in Ericsson's favor in certain circumstances as described below.
Another part of the compensation, however, is not monetary:
Unwired Planet - which rebranded from Openwave last year after the company sold off its messaging and mediation businesses to Marlin Equity Partners to focus on its patent assets - notes that in addition to the commitment to “compensate Ericsson with certain ongoing rights in future revenues generated from the enlarged patent portfolio”, “Unwired Planet will also grant Ericsson a license to the Company's enlarged patent portfolio.”
Ericsson, like Unwired Planet, is also involved in patent lawsuits, such as this one against Samsung, so access to an “enlarged patent portfolio” could prove to be a valuable exchange for the company. The pressure for successful returns on Ericsson's patent assets is perhaps even greater considering the other problems the vendor is facing. Chief among them, Ericsson said in December it would be taking a $1.2 billion charge on its troubled ST Ericsson chipmaking joint venture.
As befitting a company like Ericsson that has been at the center of so much of the R&D behind the beginnings and growth of the wireless industry, the patent trove spans more or less the history of modern cellular communications, including the birth of mobile internet by way of WAP (for a blast from the past, here's the press release from 1997 that announced how Ericsson and Unwired Planet, along with what were then the world's biggest mobile handset makers Motorola and Nokia, were working together on mobile internet).
Ericsson's patent trove includes 2,185 issued U.S. and international patents and patent applications, including 753 U.S. issued patents related to 2G, 3G and LTE technologies, “as well as many other patented inventions that are widely implemented in many popular wireless devices and mobile industries.”
Going forward, Unwired Planet says that “Ericsson will also contribute 100 additional patent assets annually to Unwired Planet commencing in 2014 through 2018.” It's not clear if these will be further patents from Ericsson's back catalog or whether they will be new ones filed by the company. Taken together, the full portfolio will run the full gamut of mobile communications, from applications and voice services through to network infrastructure and handset hardware.
It seems a little sad and strange that another one of the wireless industry's biggest innovators has shifted more of its efforts into patent enforcing (some might call it trolling) and away from forging ahead with ever more new technologies.
But as today's list of patent rankings released by IFI Claims Patent Services (via NYT) shows, the pace of those creating, filing, and receiving patents for more technologies certainly is not slowing down.
Full release below.
Unwired Planet Strengthens Mobile Intellectual Property Portfolio with the Contribution of Complementary IP from the Industry Leader in Mobile Communications
Enlarged portfolio includes over 2,400 patent assets focused on mobile technologies
Holistic and deeply relevant combined intellectual property spanning Telecommunications Infrastructure and Mobile Internet
Accelerates Unwired Planet's conscientious and sustainable long-term IP licensing program
RENO, Nev.–(BUSINESS WIRE)– Unwired Planet, Inc. (NASDAQ: UPIP) (“Unwired Planet” or the “Company”), the inventor of the mobile Internet, today announced that it has entered into a patent purchase agreement with Ericsson(NASDAQ:ERIC) whereby Ericsson will transfer to Unwired Planet 2,185 issued US and international patents and patent applications.
The transferred patents significantly broaden Unwired Planet's Mobile Internet-focused portfolio and include 753 United States issued patents related to 2G, 3G and LTE technologies. Under the terms of the transaction, Ericsson will also contribute 100 additional patent assets annually to Unwired Planet commencing in 2014 through 2018. Unwired Planet will compensate Ericsson with certain ongoing rights in future revenues generated from the enlarged patent portfolio. Unwired Planet will also grantEricsson a license to the Company's enlarged patent portfolio.
The combined portfolio reflects decades of significant investment in research and development and the companies' respective roles as pioneers in the development of technology critical to Telecommunications Infrastructure and the Mobile Internet. The contributed Ericsson portfolio includes patented inventions relating to global telecommunication technologies, such as GSM, GPRS, EDGE, WCDMA and LTE, as well as many other patented inventions that are widely implemented in many popular wireless devices and mobile industries.
Following the transaction, Unwired Planet will execute a strategy as a long-term industry platform for the realization of intellectual property value across the global telecoms and mobile handset markets.
“Ericsson and Unwired Planet teamed in the late 1990′s at the dawn of the mobile Internet to define an industry and develop technology at the cutting edge of mobile communications. Our mobile heritage reflects decades of pioneering new technology, supported by billions of dollars in research and development. Our inventions have delivered massive social value and this transaction with Ericsson reflects our commitment to protecting and realizing value from this innovation,” said Mike Mulica, Chief Executive Officer of Unwired Planet. “We look forward to leveraging a strong, multi-dimensional patent portfolio and furthering discussions with key industry players who are interested in licensing these inventions to protect and further build their product strategies.”
“In 1997, Ericsson and Unwired Planet introduced the Wireless Application Protocol that brought Internet access to mobile devices,” said Kasim Alfalahi, Chief Intellectual Property Officer, Ericsson. “Following this transaction, Unwired Planet's portfolio will reflect decades of invention at the forefront of mobile infrastructure, handset technologies and over-the-top services. We are pleased to have concluded this business deal with Unwired Planet as an alternative channel for IP licensing.”
Further details of the transaction are included in a Form 8-K to be filed by Unwired Planet with the United States Securities and Exchange Commission.
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