Ericsson, Oppo ink global patent cross-licence agreement

Hot on the heels of reporting a disappointing financial second quarter with declines in sales and net income, Ericsson has signed a multi-year global patent cross-licence agreement with Chinese consumer electronics manufacturer Oppo, covering patents essential to standards for cellular technologies including 5G.

Established in 2004, Oppo’s businesses has expanded to more than 60 countries and regions worldwide, employing more than 40,000 people. From its first days up until 2008, it made its business in media players, moving into the era of being a feature phones manufacturer and then into the mobile internet. From 2019, the company said it has been a provider of internet of experience services such as smart glasses, foldable smartphones, flip phones and standard smartphones.

In addition to a cross licence, the new deal will see Oppo and Ericsson conduct business cooperation on a number of projects related to 5G, including device testing, customer engagements and marketing activities. Oppo will also make royalty payments to Ericsson.

Putting the arrangement into context, Ericsson said that over several decades, the company has been a leading contributor to 3GPP and the development of global mobile standards, and that the value of its portfolio of more than 60,000 granted patents has been strengthened by its position as a 5G supplier and annual investments of more than SEK 45 bn in R&D.

The company added that its agreement is in line with global practice where companies that provide products using cellular 3GPP standards such as 5G need a licence agreement with patent holders to not infringe these patents, and also for patent holders to be compensated for their R&D investment. 

“This important royalty bearing license agreement with Oppo allows Ericsson to further invest in fundamental communications technologies,” said Ericsson chief intellectual property officer Christina Petersson. “The licence confirms that the patent licensing industry works and is proof that a vast majority of licence agreements are based on business negotiations.

“It also reflects the mutual respect for each other’s patent portfolio,” she said. “We now look forward to growing Ericsson’s IPR revenues with additional 5G agreements and expansion into additional licensing areas, such as IoT [internet of things] and consumer electronics.”

The financial benefit of the agreement has already been reflected in Ericsson’s Q2 2024 financial results, which the company said had the strategic highlight of taking proactive action in a challenging market environment. In the quarter, sales declined 7% YoY to SEK 59.8bn, but rose 14% in the North America market area. Adjusted gross income grew 6.4% to SEK 26.3bn, while net income for Q2 was actually a loss of SEK 11bn.

“In Q2, we maintained our leading market position, returned to growth in North America and delivered strong gross margin expansion and free cash flow,” said Ericsson president and CEO Börje Ekholm. “We remained focused on matters in our control, to optimise our business amid a challenging market environment, with industry investment levels unsustainably low.

“Our results highlight our competitiveness, and we will continue to take proactive steps to position the business for longer-term success. We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America.”