Per reporter: Wang Jing Per editor: Zhang Haini
With the continuous saturation of the domestic market, domestic mobile phone manufacturers Huawei, Xiaomi, OPPO, vivo, etc. have set their sights on overseas markets and achieved a good market share. However, unlike domestic manufacturers who have been singing in the Southeast Asian market, Europe, as the highland of global mobile phone brands, is full of uncertainty and challenges.
According to the latest news on the official website of vivo Germany on May 30, vivo has decided to temporarily stop selling products in the German market. The Vivo Germany website shows: "Unfortunately, vivo products are not currently available in Germany and therefore there is no product information on our German website. If you are using a vivo product, you can still rely on our customer service and you will also receive future software updates. ”
Image source: Screenshot of web page
The reason why vivo products cannot be sold in Germany originated in April this year in the German district court in Mannheim, Germany, in favor of Nokia in a patent case against vivo involving Nokia's 4G Standard Essential Patent (SEP). In addition to vivo, also due to the patent lawsuit filed by Nokia, another domestic mobile phone manufacturer, OPPO, has also emptied its official website in Germany since last year.
The focus of the patent war between Nokia and domestic mobile phone manufacturers is the issue of "patent fees" - whether Nokia has fulfilled its obligation to provide reasonable licenses on the principle of "FRAND" (fair, reasonable and non-discriminatory). Strategy Analytics said in a report that 5G mobile phones will bring nearly $20 billion in global patent revenue to patent holders every year after 2025, and Ericsson, Nokia and Qualcomm will account for the vast majority of these patent revenues.
Failure to agree on patent licensing fees
Europe is a place that attaches great importance to patents, and patent litigation wars are also constantly under gunfire.
According to incomplete statistics, Nokia currently files lawsuits against OPPO in 12 countries around the world, with a cumulative total of more than 100 cases. In Germany alone, there are more than a dozen patent cross-prosecutions between the two sides, and Nokia has launched more than 30 lawsuits against OPPO. Nokia's lawsuit was filed because the two sides failed to agree on a 5G patent license.
In 2022, Nokia sued vivo in Germany, India and other jurisdictions around the world for similar reasons, focusing on a combination of cellular standard-essential patents and exploitation patents covering connectivity.
In a statement, Nokia said it "Vivo's patent license agreement for Nokia's patented technology used to pay for the use of its devices expired at the end of December 2021. We negotiated a renewal long before the license agreement expired, and unfortunately vivo refused to accept our fair and reasonable offer. We also offered to conduct an independent and neutral arbitration, which was also rejected again by vivo, so we took legal action in several jurisdictions around the world, including Germany and India."
Apparently, Vivo and Nokia failed to agree on patent licensing fees. In April this year, vivo responded to reporters after the German district court ruled that Nokia won the case, saying, "vivo fully respects intellectual property rights and attaches importance to the accumulation of intellectual property rights." In recent years, we have reached cross-licensing agreements with a number of leading companies on mutual respect for the value of patents. At the same time, we continue to negotiate with Nokia for cross-license renewal, but we believe that Nokia has not fulfilled its obligation to provide reasonable licenses on the principle of 'FRAND' (fair, reasonable and non-discriminatory), and the two parties have not been able to reach an agreement for the time being. ”
Vivo also said, "We regret to learn of the first instance judgment of the German Regional Court of Mannheim, and are ready to suspend the sale and marketing of the relevant products in official German channels if necessary." We are also appealing the first instance judgement and will evaluate further steps. At the same time, we will continue to adhere to the 'FRAND' principle and negotiate with Nokia to resolve relevant issues." ”
As we all know, the communication industry is a very standardized industry, and standard essential patents (SEPs) are those patents that are essential for the implementation of standard technologies, but there is no unified standard in the industry for specific patent charging issues.
Ericsson's patent fee standards for 5G multi-mode mobile phones are mainly adjusted according to the sales price of the mobile phone, and the patent fee is between $2.50 and $5 per unit; Nokia said in 2018 that the license fee for the 5G SEP combination is capped at 3 euros per device; Huawei capped patent licensing fees at $2.50 per phone and offered a reasonable percentage rate that applied to the phone's selling price. In terms of pricing, Huawei's standard is much lower than the published rates of other overseas patentees.
How to define the fair, reasonable and non-discriminatory conditions of the "FRAND" principle? Shen Hongfei, vice president of Huawei's legal department and director of the major project department, once explained to reporters: "On the one hand, it is necessary to refer to the licensing practices of the industry, which can be compared to the agreement; On the other hand, in the past ten years, major countries and regions have been practicing and elaborating on this fair, reasonable and non-discriminatory application. ”
After some OPPO products were suspended from sales in Germany, OPPO's reply also reflected that Nokia did not seem to fulfill the "FRAND" principle. "OPPO respects intellectual property rights and advocates reasonable fees, advocates the settlement of intellectual property disputes between licensors and licensees through friendly negotiation, and respects the value of patents with each other. On the other hand, OPPO resolutely opposes unreasonable and high-priced patent charges, resolutely opposes malicious behaviors that coerce licensees to negotiate and accept unreasonably high license fees through litigation, and advocates the establishment of a long-term and healthy intellectual property ecosystem. ”
Image source: Daily Economic News (data map)
Consciously accumulate communication patents to compete for 5G discourse power
Although Nokia phones are rarely found in the market, Nokia still holds a large number of patented technologies related to mobile devices through a portfolio of intellectual property from Nokia Technologies, Nokia Networks and Alcatel-Lucent. The gradually maturing 5G market has allowed Nokia, which has declined in its mobile phone business, to "make efforts" on the battlefield of patent litigation, and patent licensing fees have gradually become an important source of revenue for Nokia in the world.
According to the financial report, Nokia's 2019 (patent) licensing fee revenue was 1.402 billion euros, and the 2020 license fee revenue was 1.487 billion euros. In fact, in the past decade, in the field of mobile phones alone, Nokia has filed patent lawsuits against Apple, Huawei, HTC and many other companies.
Patent licensing has always been the "trump card" behind the technology game of technology giants, and it is also an important part of the "moat" of the market. In the 5G era, domestic mobile phone manufacturers began to consciously accumulate communication patents.
According to the research report on global 5G standard-essential patents and standard proposals released by the China Academy of Information and Communications Technology, Huawei's number of effective global patent families ranked first in terms of the proportion of effective global patent families, accounting for 14.59%. Qualcomm ranked second, accounting for 10.04%; Samsung is in third place, with a share of 8.80%. Companies ranked fourth to tenth are ZTE, LG, Nokia, Ericsson, Datang, OPPO and Xiaomi.
A relevant person from a domestic mobile phone manufacturer told reporters through WeChat: "In the 4G era, domestic mobile phones do have fewer patents, but 5G is different, and now Huawei has the most patents, but Nokia charges higher patent fees than Huawei's, just want to rely on patents to collect money." ”
The patent issue is not only a game between technological research and development and commercial returns, but also a competition for advanced technologies. Five years ago, OPPO had only more than 20,000 patents worldwide, but as of March 31, 2023, OPPO has more than 90,000 patent applications worldwide and more than 46,000 global grants. Among them, the number of invention patent applications exceeded 82,000, and invention patent applications accounted for 90% of all patent applications. According to the ranking of the number of International Patent Treaty (PCT) applications in 2022 released by the World Intellectual Property Organization (WIPO), OPPO ranks 6th in the world.
"R&D innovation and IP are future-oriented investments that are well worth it." Shen Hongfei said. Huawei is currently experiencing a supply chain crisis, but Huawei's investment in innovation and intellectual property has not been affected. In 2022, Huawei's R&D investment reached CNY 161.5 billion, accounting for 25.1% of its annual revenue, and its cumulative R&D expenditure exceeded CNY 977.3 billion over the past decade.
"Mobile communication, short-range communication, and audio and video coding and decoding are the basic platform technologies of the ICT industry, which cannot be achieved overnight, and require long-term continuous investment to lead. At present, Huawei has formed high-value technologies and related patent packages such as 5G, WIFI, audio and video codec around the world, and is also pre-researching next-generation standard technologies such as 6G, WIFI7, and AI Video Coding, as well as new standard technologies such as Starflash short-range communication technology and UWA ultra-high-definition video technology. Shen Hongfei said.
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