Mobile telecoms network equipment market leader Ericsson and rival ZTE have settled a dispute over patents that will see the up-and-coming Chinese company pay royalties to the Swedish firm.

Ericsson, which has an industry leading portfolio of 27,000 patents, declined to say how much ZTE would pay in royalties. ZTE has denied the sum was as high as 500 million euros ($645 million).

Legal action is usually the last resort and we are very happy we have solved this dispute with ZTE, said Ericsson spokesman Fredrik Hallsten.

We have signed more than 90 patent agreements with different vendors worldwide. Now we can add ZTE to this group, Kasim Alfalahi, Chief Intellectual Property Officer at Ericsson, said in a statement.

The fight to reap the rewards of innovation in the highly competitive industry has also seen ZTE and Chinese rival Huawei launch tit-for-tat patent battles with each other.

Ericsson in April 2011 filed lawsuits in Germany, Britain and Italy against ZTE for infringing on several of its patents.

ZTE said Thursday it would drop a lawsuit against Ericsson in China.

Ericsson has stressed that it wants to boost its revenues from technology rights and Alfalahi was named in January as a direct report to chief executive Hans Vestberg rather than to the chief technology officer.

Ericsson is already a net receiver of royalties. It aims to grow its intellectual property rights revenues above the 4.6 billion crowns net revenue generated in 2010.

($1=0.7757 euros)

(Editing by Will Waterman)

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