Specially planned
The source of this article | Ginkgo Technology
Written by | Wang Xiaolou
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The title image | Visual China
The Spring Festival, what should have been a leisurely holiday, is an extremely dangerous day for Chinese technology companies.
Patent hunters who have been waiting for a long time will deliver a fatal blow to Chinese companies. This move has been tried and tested.
In February 2017, just after the Spring Festival, Kang Vincent suddenly sent a letter to Huawei in the form of a unilateral statement open letter, asking Huawei to obtain its global patent packaging license.
Internationally, companies like Cornwson, which have almost no physical business and survive mainly by launching patent infringement lawsuits, are everywhere, and the industry has given them very vivid nicknames: patent trolls, patent cockroaches, patent sharks.
In 2018, Xiaomi Lei Jun was invited to the United States on the fourth day of the Lunar New Year in 2019 to "Celebrate the New Year" because of Dareltech's four patent infringement lawsuits, and there was a great sense of pain in Liangshan on the night of red breeze and snow.
During the Spring Festival holiday in 2020, Sharp also launched a patent infringement lawsuit against OPPO.
Hearing this news, Feng Ying, senior director of OPPO's intellectual property department, was very surprised. Because OPPO was already in talks with Sharp a few months ago, the two companies would first have full consultations according to the normal patent negotiation process.
Around technology and price, some companies may not even sue for five or six years. After all, if a reasonable fee can be negotiated, both parties can benefit from it.
Sharp has a glorious history of nearly a hundred years in the manufacturing industry. In the ranking of 4G LTE patented technologies, it still ranks among the top ten in the world, and the wall of some "standard essential patents" that sue OPPO alone is enough to make the industry daunted.
Immediately after overturning the negotiating table, Sharp immediately began to demand that OPPO pay a high patent fee: about $1 per phone. According to OPPO's sales at that time, it had to pay $150-200 million in patent fees a year.
The two options of conforming to Sharp's conditions of compromise and toughness are very headaches and tricky for OPPO, no matter how to choose.
Smart phone profits are meager, choose to comply with Sharp's requirements, which means that OPPO to pay the patent fee, ten years may not be earned back; if tough to fight, OPPO once defeated, the final determination of the patent fee, may also be higher than the compliance compromise, and it will certainly become the standard for Sharp to negotiate with other domestic mobile phone manufacturers.
After the withdrawal of Huawei's mobile phone business, OPPO was fortunately and helplessly pushed to the cusp of the storm, which made many domestic intellectual property lawyers sweat for it. This can't help but remind many people of the bitter past when China's DVD industry collapsed many years ago.
The death of the DVD industry
Zhen Wen was an engineer who was one of the earliest engineers in China engaged in VCD and DVD software development.
He entered Aido in 1995 and participated in the development of the first VCD to BBK in 1998, and then later experienced the DVD industry disaster. What made him most sad was that this industrial "disaster" could have been avoided at the source, because no one paid attention to it at that time.
"Physically, the patents belong to them (foreign-funded enterprises), but the inventor of the code is actually Chinese, and it was Wanyan Company that invented it."
The Wanyan company in Zhen Wenxian's mouth was founded in 1993 by Jiang Wanmeng and Sun Yansheng, the "father of MPEG", and developed and produced the world's first VCD machine in that year.
However, the two founders did not apply for this patent, which also led to the first batch of 1,000 VCD machines produced by Wanyan Company being sold out and becoming the early anatomical objects of domestic and foreign home appliance companies. Including the laser disk technology used by foreign companies on DVDs later, it is based on the MPEG-2 standard formulated by Wanyan Company in 1994. Although we cannot simply define the MPEG-2 standard as a simple upgrade of MPEG-1, this standard is really formulated by China, and the patent rights no longer belong to Wanyan.
A common international law for patent rights is that whoever applies for a patent first belongs to whomever applies for a patent right.
In 2001, China's DVD exports accounted for 70% of the world's total production. The "6C Alliance", composed of hitachi, Panasonic, JVC, Mitsubishi, Toshiba, and Time Warner, as well as the "3C Alliance" composed of Sony, Pioneer, and Philips, began to launch an "attack" on the Chinese DVD industry by collecting patent fees. The 6C Union has published patents since 1997 and began sending letters to enterprises in 1999 to inform them of the payment of patent fees.
In more than a year of patent negotiations with Chinese DVDs, the 6C Alliance has been holding back, but suddenly the global DEMAND for DVDs reached 40 million units, and Chinese manufacturing accounted for 90% of the offensive in 2002.
It's a game of releasing water to raise fish.
Foreign companies have long had a professional prevention and response strategy for patent protection, and they always keep an eye on every move of the industry. If there is no oil and water, it will not bother you, and even if there is any "offense", it is to turn a blind eye. Wait for the fish to be fattened and then fished, which is the usual tactic of patent attack and defense.
At that time, the overseas enterprise alliance that launched lawsuits against the DVD industry coincided with the Spring Festival in 2002, and in January and February of that year, thousands of DVDs were seized at customs. Chinese DVD companies, which have no power to fight back, cannot come up with any chips to deal with, and can only obey all the negotiating conditions.
By 2005, on the one hand, the mainland's DVD production still accounted for more than 90% of the world's total production. On the other hand, DVD manufacturers are constantly merging and shutting down, from 400 to 150. In this way, China's DVD industry has gradually become an overseas foundry.
In Zhen Wenxian's view, China's DVD started earlier, Wanyan Company as an industry leader, but if you attach importance to patented technology, in that "encirclement and suppression", it will not be to the end, can not come up with decent and equivalent bargaining chips.
"Patented technology is like strategic nuclear weapons, for companies, you can choose not to use it, but you must have it, otherwise you don't even have the choice to be beaten."
Just as the atomic bomb has not been used once since World War II, it can contain all kinds of forces in the great power game and keep the world in a delicate balance.
The tragedy never stops
The bitter past of the DVD industry, looking back at the process of China's reform and opening up, can be seen as the feeling of the patent law crossing the river.
Until 1984, the Fourth Session of the Sixth National People's Congress deliberated and passed the Patent Law. At that time, nearly two hundred years had passed since the First Patent Law of the United States was enacted.
At that time, China had just left the planned economy, short-sightedness and impetuosity were still prevalent, and applying for patents only to count quantity rather than quality was one of the many problems faced in the early days of the establishment of China's intellectual property system, and even the Patent Law was regarded by many as "superfluous".
At the corporate level, no matter how much forward thinking you have, you can't match the boss's sentence "What is the use of applying for this patent?" ”
Compared with Western countries, there is even a passage circulating in the anecdote: If one day you are stranded on an isolated island, the best way to be rescued is to draw a Mickey Mouse on the island, and Disney's legal counsel will come to sue you as quickly as possible.
The fact behind this joke cannot be ignored is that Western companies have long incorporated the intellectual property rights protection system into normal management.
Helplessly, the "imported product" of intellectual property rights, Chinese and Chinese enterprises do not have much time to calmly digest. Although the WTO accession rules and global economic integration have strengthened international trade links, the market space available to Chinese enterprises has been broadened. However, the change in the law of competition has made many Chinese companies fall before they have time to deal with it.
To some extent, the total destruction of the DVD industry is the two sides of the Chinese enterprises": they must always be prepared to be beaten by the most poisonous, but also strive to embrace and say the most beautiful love words.
The tragic story of the DVD industry has not stopped, and HTC, which has made countless people feel sorry, is also a giant who fell due to patents.
In 2011, Apple took HTC to court for patent infringement, demanding a ban on the sale of 29 phones about HTC in the United States. At that time, HTC was in the sky in North America, and founder Wang Xuehong even said that "if there are only two mobile phone manufacturers in the future, HTC will definitely be one of them." This is not arrogance, because at its best, even Apple openly admitted that HTC was the number one competitor.
However, due to HTC's "naked running" on the patent, it was seriously injured in the showdown with Apple, and finally Apple won the lawsuit, and HTC spent nearly a year to reconcile with Apple. BlackBerry, Samsung, Nokia, and Microsoft have also followed Apple's example in launching patent lawsuits to carry out a global "encirclement and suppression" of HTC. Patent disputes after patent disputes, one after another, have led to the shrinking of HTC's global market.
To this day, almost no one remembers that it was the sales champion that was equal to Apple in the Us market.
Awakening during the hunt
In recent years, almost all overseas enterprises have encountered patent "encirclement and suppression", and the mobile phone industry is the first to bear the brunt.
In 2013, Xiaomi's first battle overseas was a duel with Blue Spike, known as a patent troll; in 2014, Xiaomi was sued by Ericsson for patent infringement in India and was banned from selling. In 2016, another patent lawsuit was set off between Meizu and Qualcomm.
In the face of the hard "patent wall", not only is the Internet thinking vulnerable, but even Huawei, which has its self-developed Kirin chip, cannot be bypassed. Mobile phone manufacturers also have to pay patent fees before they find an alternative.
Why is the patent war focused on the mobile phone industry?
The mobile phone industry is on the trend of the times, and is the integrator of various hardcore new technologies. A smartphone has more than 400,000 patented technologies, and no mobile phone manufacturer can do it completely all.
Huge market demand and patents can be quantifiable, which will inevitably bring about an endless game between mobile phone manufacturers, mobile phone manufacturers and other companies with patented technologies, never stopping.
It is also one cruel and bloody patent war after another that has awakened countless enterprises and entrepreneurs, who have gone forward to learn in embrace, grow in forbearance, and grow in development, waiting for the opportunity and counterattacking.
I have to admit that the intellectual property rights of a large number of products in the world today are in the United States. Ren Zhengfei has said in public that the depth and breadth of Science and Technology in the United States are very worth learning, although Chinese companies, including Huawei, are leading in individual fields, but the gap between China and the United States is still very large.
In the final analysis, the core of the patent war is still the patent technology itself, and if there is no excellent technology, everything is in vain.
Ren Zhengfei is one of the few entrepreneurs in China who has always maintained a sober mind, and Huawei can have today's status in the jianghu, which is inseparable from his foresight. He believes that the spirit of innovation is worth encouraging, but do not be blind, we must stand on the basis of human civilization, or stand on the shoulders of predecessors to move forward.
The Huawei HiSilicon "spare tire" plan, which is familiar to the outside world, does not start from the source of innovation, and has also paid a lot of intellectual property fees to others, some of which have signed cross-licensing agreements and some of which are perpetual licenses.
Therefore, we need to exclude a cognitive misconception that patent rights are not monopolies, and most patent wars do not themselves fall into the category of malicious competition. On the contrary, it is protecting and encouraging innovation in a relatively fair way, and promoting the progress and development of science and technology in the world.
For example, the 5G-related standards that make Americans afraid originated from a mathematical paper by a Turkish professor more than a decade ago, and two months after the paper was published, Huawei invested thousands of people to start researching various patents centered on papers. Although the Turkish professor Arikan is not a staff member of Huawei, Huawei has taken out a lot of money to support the professor's laboratory, so that he can recruit more R & D personnel.
For more than a decade, Huawei's 5G basic patents have ranked first in the world. In the previous two years of the 5G patent battle, Huawei has never been left behind.
However, this does not mean that the more patented technology you have, the more you can win, there is an old saying in the industry, "there is no invalid patent", but also often can determine the outcome of the patent war.
First SEP injunction ruling
"Invalid" is a technical term in the ip community.
The specific approach is to find evidence of the patented technical solution disclosed first from the massive patent documents and other public information, question the originality of the prosecution's patent, and shake the basis on which it relies to initiate infringement lawsuits.
A few years before the lawsuit against Huawei, Convinson bought some of the standard essential patents, known as SEP (Standard Essential Patent), from Nokia. It is worth a huge value as a strategic reserve asset, and once owned by a company, it is equivalent to "having a mine at home".
In the field of communications, each terminal product brings together tens of thousands of patented technologies, and SEP license fees have become an indispensable "ticket" for communication enterprises.
But in the context of "technology lock-in", SEP is also a high wall: it can decide whether to allow others to use patents, and it can also determine whether others can enter the relevant technology fields and markets.
Huawei and Convinson have actually been negotiating over licensing rates for many years, but negotiations are only the first step in the regular process, and Convinson still sued Huawei in the UK and Germany. At that time, Kang Vinson proposed to Huawei the Chinese licensing rate, which was more than ten times higher than the Nanjing Intellectual Property Court's ruling.
In the 3-4 years of communication with Kang Vinson, 8 Chinese patents were "invalidated" by Huawei in the patent licensing fees of the other party's 11 patent families with CN patents, and then Huawei launched a counterattack lawsuit. At Huawei's request, in August 2020, China's Supreme Court ruled that Kang Vinson could not apply to enforce the first-instance judgment to stop infringement in Düsseldorf, Germany, before the Supreme Court issued a final judgment.
This is the first SEP injunction ruling made by China and was selected as one of the "Top Ten Cases of the People's Courts in 2020". Previously, China had not introduced an injunction system, and there were no countermeasures against the injunction.
In the face of such international patent disputes, as long as a foreign court initiates a paper injunction, Chinese enterprises will immediately lose judicial protection and can only choose to withdraw the lawsuit or settle privately. This experience of passively putting on the negotiating table is what Chinese technology companies used to get used to.
Nowadays, Chinese courts have also begun to use injunctions, which undoubtedly brings guiding significance to Chinese courts that later handle such international litigation. The final ruling in the Huawei-Corvinson case provides a very important reference value for the patent tug-of-war between OPPO and Sharp.
After Huawei, OPPO fought back
Go grandmaster Wu Qingyuan once told a famous "Go theory": you surround your territory, I surround my territory, there is no fighting, and finally you stand tall and up.
OPPO founder Chen Mingyong likes Wu Qingyuan's words. More importantly, as a former practitioner of the DVD industry, he has personally seen an industry capsized because of intellectual property rights. He understands that if investment in patent layout and research and development cannot be increased, OPPO will sooner or later make a "wedding dress" for others and lose its foundation.
In 2014, OPPO, which is expanding rapidly in overseas markets, introduced an intellectual property leader, which is the Feng Ying mentioned above. Feng Ying has a wealth of professional experience, Huawei was his old owner, during his tenure at Huawei, he participated in various patent wars, and also likes to apply the "Go Heart Method" to the battlefield of intellectual property litigation.
After Huawei's mobile phone business was no longer the focus, he could clearly feel the patent firepower concentrating on OPPO's head. In the first quarter of 2022, he and his team were working on hundreds of patent cases, including Nokia alone with more than 40 cases.
The global intellectual property litigation war involves multiple dimensions, in his view, the winning side is not predictable from the beginning, it is necessary to practice internal skills, coordinate the overall situation step by step, and create chemical reactions in a chain layout to balance each other.
After Sharp launched the lawsuit, OPPO quickly made a decision after weighing it several times: it is not possible to blindly compromise and let others slaughter, nor can it break the net, and the best way is to talk while fighting.
Sharp sued OPPO for some of the patented technologies, which have been successfully established before, including patents for LTE communication standards that have been licensed with Mercedes-Benz's parent company, Daimler Group.
According to Song Xiantao, a lawyer at Qiancheng Law Firm, Sharp came up with the "nuclear weapon" of standard essential patents at the beginning, intending to quickly resolve the battle.
When Sharp sued OPPO in Munich, Germany, the Shenzhen Intermediate Court also issued an injunction order under OPPO's application. However, only 7 hours after the injunction was issued, the First Court of Munich issued a "counter-injunction order", ordering OPPO to apply for the withdrawal of the injunction order of the Shenzhen Intermediate Court.
However, the Shenzhen Intermediate People's Court did not pass the preservation ruling, requiring Sharp to withdraw the "anti-injunction order", but launched the world's first "anti-anti-injunction order".
One forbidden, one anti, one anti... OPPO and Sharp "infinite matryoshka dolls" on the European battlefield, tokyo in Japan and Taiwan, OPPO also launched a counterclaim against Sharp.
At the end of 2020, less than a year after Sharp initiated the lawsuit, the Shenzhen Intermediate Court issued a jurisdictional opposition ruling against OPPO v. Sharp, confirming the chinese court's jurisdiction over the global licensing rates for standard essential patents.
This is the first time that a domestic court has confirmed the jurisdiction of a Chinese court over the global licensing rates for standard essential patents in the form of a written ruling.
At this time, Sharp's decline in the main battlefield has emerged, and if the global licensing rate continues to be lowered, the global charging standard will also be reduced, which will be a huge loss.
So Sharp appealed to the Supreme Court.
In the international IP field, the term "global licensing rate" plays a pivotal role. It represents jurisdiction on the one hand and, on the other hand, is related to the economic strength of the country itself.
In the previous transnational patent game, the initiative to formulate international standards has always been controlled by developed countries. It wasn't until the last two years that a new topic evolved in China's intellectual property community: global licensing rates.
Now, China is actively countering the long-arm jurisdiction of overseas courts.
The latest revisions to China's Patent Law in 2021 mean that China will become more deeply involved in the formulation of global IP governance rules.
For Sharp, the initiator of this dispute, the judgment of the "global licensing rate" means that in theory, any country and region in the world should be charged at a uniform rate, and the excessive patent fees demanded by Sharp will certainly not be supported by the Chinese courts.
Eight months later, Sharp's appeal to the Supreme Court was eventually dismissed.
At this point, the situation has been completely reversed. Good news from all over the world has reached OPPO headquarters. During the one-year and nine-month patent dispute between the two parties, OPPO invalidated dozens of Sharp-related patents and Chinese patentes. At the same time, OPPO found that sharp mobile phones sold in Japan used OPPO's fast charging technology, so it counterclaimed and counterattacked to attack Sharp's two most important cities, the Japanese market and the Taiwan market.
Peace is finally out of the way, according to industry insiders told Ginkgo Technology, Sharp and OPPO have reached a settlement.
The future is no longer to be feared
The past is not like smoke.
Throughout these years of patent wars, Chinese companies have gone from being passively beaten to sending people to being under the fence, from active participation to setting standards, to increasing patent discourse.
Inspiring and nine dead stories, in the constant alternating opening and ending curtain, although too many people have been far from the center of the stage, but the patent war of jingo iron horse will continue to write, history will not forget them.
As more and more patent wars are written into textbooks, Chinese companies such as Huawei and OPPO have chosen to take up "guns" while expanding their patent "arsenals".
According to the latest "Global 5G Patent Activity Report (2022)" released by the China Communications Institute, as of December 31, 2021, more than 64,900 5G standard essential patents were declared worldwide, and more than 46,100 patents were effective globally.
The top ten companies in terms of the number of effective global patent families are Huawei, Qualcomm, Samsung, LG, ZTE, Nokia, Ericsson, Datang, OPPO and Sharp. Huawei's effective global patent family accounted for 14%, ranking first with a large advantage.
Today, OPPO's global patent applications have reached 77,000, and there are about 38,000 authorized patents, ranking ninth in the world for 5G patents; OPPO and Apple are also promoting the construction of the next generation of video patent pools to form a "patent alliance".
This also means that OPPO has begun to think about "patent realization" and put it into practice, and at present, it seems that its strategy is relatively conservative, without "peer-to-peer" lion openings, but into the patent pool to share.
OPPO's fast charging technology has appropriately charged more than 40 companies patent fees, and OPPO has achieved good results in the key areas of imaging, AI, antenna and folding screen (Find N).
However, the smoke of sharp battlefield has just dissipated, and OPPO has been pulled by Nokia to another new battlefield.
In 2021, Nokia launched a lawsuit with OPPO as a breakthrough in an updated agreement on essential patents for cellular standards, demanding high royalties from the entire mobile phone industry, including 3G, 4G and 5G.
In the eyes of the mobile phone industry, this practice is somewhat "lion big mouth".
In this wave of patent litigation by Nokia, Xiaomi is also prominently listed. Vivo filed counterclaims against Nokia in some places.
OPPO filed an IPR for the reexamination of Nokia's US10,701,588 patent with the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) in March this year, challenging the validity of the patent with action.
In the 20 years since joining the WTO, the industrial tragedy of DVD has long been buried in the old paper pile, one patent war after another is still vividly remembered, and the blood is always full of warning prophecy that "backwardness will be beaten", and Chinese enterprises should not and will not forget those pains.
But don't hate it, the law of the jungle has always pushed commercial civilization forward steadily, and there is a classic line in the movie "The Godfather":
Don't hate your enemies, that will affect your judgment.
Only by respecting the opponent and continuing to invest in scientific and technological research and development will people not feel afraid in the future.