Ericsson transfers over 2,400 patents to Unwired Planet (formerly OpenWave) in patent-monetization, revenue-share deal
After selling its interest in Sony Ericsson to Sony for $1.47 billion and exiting the cell phone business, Ericsson looks to generate revenue from its cell-phone patents. And after selling its mobile-messaging business, OpenWave changed its name to Unwired Planet and is focused on monetizing its patent portfolio. Prior to the Ericsson deal, Unwired Planet held about 200 patents
Ericsson is not getting any cash up front in the deal but instead will receive 20% of the first $100 million generated by Unwired Planet, 50% of the revenue over $100 million, and 70% of the revenue over $500 million.
The deal is a good move for Ericsson. For decades it has been at the center of innovation in the wireless industry. Its patents cover the entire spectrum of cellular communications. Even though it is out of the cell-phone market, it makes sense for Ericsson to try and generate significant revenue through patent monetization in order to maximize the return on the billions it invested in R&D. And by partnering with Unwired Planet which has vast experience in cellular networks and patent monetization, Ericsson can generate revenue without having to lose focus of its core businesses.
It is worth noting that Nokia earned hundreds of millions of Euro in 2012 through patent licensing. Clearly, patent monetization is becoming a meaningful source of revenue for technology companies big and small.