InterDigital sued OPPO, the patent risk of mobile phone manufacturers is getting more and more serious!
Dec 27,2021
According to a recent announcement by InterDigital, a US patent operating company, on December 20 and December 22, the company has initiated patent infringement lawsuits against OPPO, OnePlus and Realme in the United Kingdom, India and Germany. The patents involved include 3G, 4G, 5G and For patents related to the HEVC standard, injunctions are required in all litigation. This is also after Xiaomi, InterDigital once again initiated a lawsuit against Chinese mobile phone companies in the past two years.In August of this year, InterDigital announced a settlement with Xiaomi. InterDigital’s financial report showed that Xiaomi’s licensing fee to InterDigital reached US$45 million in the third quarter of 2021 alone. InterDigital's patent licensing strategy has always been relatively strong, and it has also used litigation methods to force mobile phone companies to accept its patent fees. Since 2007, the company has had lawsuits with industry manufacturers such as ZTE, Huawei, Apple, Lenovo, Samsung, and Xiaomi. Among the aforementioned companies, with the exception of Lenovo and which are still in litigation, all other companies have signed a license agreement with them, and the annual license fee exceeds tens of millions of dollars without exception.
For OPPO, it can be said that there has been a wave of unrest and another wave. While Nokia's "power attack" has not stopped, it will encounter InterDigital, a powerful enemy, which also reflects the increasingly severe patent risks faced by domestic mobile phone manufacturers in the process of internationalization. situation. Even if OPPO's patent strength in a domestic mobile phone company already exists as a "top student" and it has an intellectual property team with strong professional capabilities, it is obviously not easy to pass this patent "pass".
After Xiaomi, InterDigital "Aims" OPPO
Picture: InterDigital v. OPPO Announcement
At present, there is no further details on the InterDigital v. OPPO case, but from the announcement of InterDigital in just a few lines, this patent lawsuit against OPPO is a large-scale global lawsuit.
In terms of the time of the prosecution, InterDigital successfully used the lawsuit to force Xiaomi to settle, and took advantage of OPPO's full response to Nokia's opportunity to initiate a lawsuit. The timing was just right. In terms of patent selection, whether it is 3G, 4G, 5G and other wireless communication technologies or HEVC video coding and decoding technologies, they are technologies that cannot be bypassed by smart phones at present and for a long time to come. In terms of litigation venue selection, the United Kingdom is the first country in the world to declare jurisdiction over the global standard-essential patent licensing rate. After Wireless Planet v. Huawei, it is also considered to be a jurisdiction that favors patentees; Germany is traditionally patented. A jurisdiction where litigation is frequent and tends to be patentees; India is also a smart phone market and active jurisdiction that has gradually emerged in recent years. The choice of venues for these litigations is also expected.
The situation encountered by OPPO this time is quite similar to the recently concluded InterDigital v. Xiaomi case. At the end of July 2020, InterDigital initiated a patent infringement lawsuit against Xiaomi in India and applied for an injunction. At that time, China-India relations were tightening, and India was the largest overseas market for Xiaomi mobile phones. InterDigital's choice of time and place for the prosecution was quite intriguing. InterDigital sued Xiaomi to use the same patents related to wireless communications and the HEVC standard. After the Indian prosecution, InterDigital subsequently also filed additional prosecutions against Xiaomi in European countries such as Germany.
At present, there is no further details on the InterDigital v. OPPO case, but from the announcement of InterDigital in just a few lines, this patent lawsuit against OPPO is a large-scale global lawsuit.
In terms of the time of the prosecution, InterDigital successfully used the lawsuit to force Xiaomi to settle, and took advantage of OPPO's full response to Nokia's opportunity to initiate a lawsuit. The timing was just right. In terms of patent selection, whether it is 3G, 4G, 5G and other wireless communication technologies or HEVC video coding and decoding technologies, they are technologies that cannot be bypassed by smart phones at present and for a long time to come. In terms of litigation venue selection, the United Kingdom is the first country in the world to declare jurisdiction over the global standard-essential patent licensing rate. After Wireless Planet v. Huawei, it is also considered to be a jurisdiction that favors patentees; Germany is traditionally patented. A jurisdiction where litigation is frequent and tends to be patentees; India is also a smart phone market and active jurisdiction that has gradually emerged in recent years. The choice of venues for these litigations is also expected.
The situation encountered by OPPO this time is quite similar to the recently concluded InterDigital v. Xiaomi case. At the end of July 2020, InterDigital initiated a patent infringement lawsuit against Xiaomi in India and applied for an injunction. At that time, China-India relations were tightening, and India was the largest overseas market for Xiaomi mobile phones. InterDigital's choice of time and place for the prosecution was quite intriguing. InterDigital sued Xiaomi to use the same patents related to wireless communications and the HEVC standard. After the Indian prosecution, InterDigital subsequently also filed additional prosecutions against Xiaomi in European countries such as Germany.
At that time, Jiwei.com had predicted that InterDigital's lawsuit against Xiaomi was only the beginning of the matter. According to statistics, InterDigital's revenue has dropped sharply in 2018 and 2019. Of course, there is a Huawei agreement that expires, which is again related to InterDigital’s entry into negotiations. However, even if it joins Huawei’s 2020 payment of more than US$30 million in patent fees to the company, its annual revenue is below US$350 million. The company’s minimum income level. According to foreign media analysis, the new crown epidemic in the past two years has also caused a certain negative impact on the charging business of patent operating companies. Therefore, InterDigital must "open up" new customers based on changes in the market structure, with mobile phone companies such as Xiaomi and OPPO being the first to bear the brunt.
The grievances between InterDigital and Chinese companies
InterDigital is a listed company that relies on patent fees for its livelihood. All R&D investment is converted into patents, and then the patents are used to collect license fees from terminal manufacturers. This business model determines that it must reach a license agreement with as many terminal manufacturers as possible with license conditions that are as beneficial to itself as possible. It is conceivable that it is almost impossible for InterDigital to achieve this goal by purely negotiating means. So using litigation to promote negotiations has become the company's fixed business routine. It is difficult to reach agreement on the licensing fees and conditions for OPPO this time.
According to Jiwei’s previous statistics, in the past ten years, InterDigital has five customers whose revenue accounted for more than 10% (inclusive) for more than two consecutive years. They are Apple, Samsung, LG, Huawei, and Pegatron. Once in court with InterDigital. Except for the lawsuit against Apple which only appeared in InterDigital's financial report and was unclear, the rest of the lawsuits have caused greater impact.
And this litigation strategy has indeed brought a lot of income for InterDigital. Taking Samsung as an example, from 2018 to 2020, the patent fees that Samsung paid to InterDigital were 76.85 million U.S. dollars, 79.73 million U.S. dollars and 78.98 million U.S. dollars, accounting for more than 20% of InterDigital's total revenue that year.
In recent years, with the rise of Chinese terminal manufacturers, Interdigital's lawsuits against Chinese manufacturers have become more frequent. In 2011, InterDigital filed a patent infringement lawsuit against Huawei and ZTE in the Delaware court, and filed a 337 investigation with the U.S. Trade Commission (ITC). In the same year, Huawei sued InterDigital and other companies to abuse its dominant market position in Shenzhen Intermediate People's Court. Since then, InterDigital has fought with Huawei and ZTE for many years. In 2020, InterDigital successively reached a global patent license agreement with ZTE and Huawei, and settled all mutual lawsuits. According to public information, the license agreement is valid until 2023. During this period, Huawei and ZTE's 3G, 4G and 5G products will pay InterDigital royalties.
It is worth noting that in September 2013, the National Development and Reform Commission initiated an anti-monopoly investigation on InterDigital, and in March of the following year, InterDigital submitted an application for suspension of the investigation, which contained a commitment to authorize the unlimited mobile standard essential patent portfolio to Chinese mobile terminal manufacturers. On May 22 of that year, the National Development and Reform Commission suspended the investigation. This five-year commitment allowed InterDigital to suspend its offensive against Chinese manufacturers. However, in August 2019, this commitment expired less than 3 months, InterDigital can't wait to initiate lawsuits against Lenovo in the United Kingdom and the United States. In July of the following year, he took another shot against Xiaomi. Now the global licensing agreement with Xiaomi has been settled. Although the litigation with Lenovo is still in progress, the overall trend of the litigation is also more favorable to InterDigital. If nothing else, the two parties will also end in a settlement.
At the same time, the contribution of Chinese manufacturers to InterDigital's performance has also increased substantially. According to its financial report, InterDigital received more than US$14 million in licensing fees from ZTE in 2019. Although it has not been disclosed in 2020, the volume of licensing fees should not change much; in 2020, the company will collect more than US$30 million in licensing fees from Huawei. In the two quarters, Huawei paid more than US$20 million in licensing fees. In 2021, InterDigital successfully included Xiaomi as its customers, and collected US$45 million in patent fees in the third quarter.
Judging from the payment of a small number of major customers disclosed in InterDigital's financial report, the company's revenue from Chinese companies has doubled in the past two years. It is foreseeable that as more Chinese manufacturers become InterDigital's attack targets, this proportion will continue to grow rapidly.
Increased risk of intellectual property rights of mobile phone manufacturers
In recent years, there have been frequent global patent lawsuits against Chinese mobile phone manufacturers. Mobile phone manufacturers represented by Huawei, Xiaomi, and OPPO have repeatedly suffered patent attacks from overseas patentees. Among them, the cases that have attracted greater attention in the industry include InterDigital and Huawei, Unwired Planet and Huawei, Ericsson and Xiaomi, Nokia and OPPO.
Jiwei.com believes that the intellectual property risks of Chinese mobile phone manufacturers are expected to become more and more severe in the future. The reasons are as follows:
First of all, the most important reason is that the internationalization and market share of Chinese mobile phone manufacturers are getting higher and higher, and more and more overseas markets are "occupied". Intellectual property risks are what mobile phone companies must overcome in their global expansion. The levels and the problems solved are "sweet troubles".
Secondly, as mobile phone communication technology evolves from 4G to 5G, patentees’ "appetite" for charging patent fees is also increasing. A related person from more than one mobile phone company told Jiwei that the distribution ratio of essential patents for 5G standards 4G is more decentralized, which means that more companies and patent operating companies will charge mobile phone companies for patent fees, and the required rates are much higher than 4G. The commercial use of 5G technology is still in the ascendant, and the high patent fees have already caused mobile phone companies. We are "overwhelmed".
Finally, there is the impact of the global epidemic in the past two years. The arrival of the epidemic has made life more and more difficult for some patent operating companies without physical products. According to foreign media analysis, the new crown epidemic has caused a certain negative impact on the charging business of patent operating companies, which has also stimulated companies such as InterDigital to become more and more aggressive in their choice of litigation.
OPPO: Respect intellectual property rights but oppose excessive fees
From OPPO's point of view, the severity of the situation may be unprecedented. Since July this year, Nokia has initiated a massive patent lawsuit against OPPO in the UK, France, India and other countries and regions. Although OPPO has made a beautiful response, it has not only done regular responses, but also counterclaimed Nokia with 5G base station patents in many countries and regions, but it is not easy to fight against Nokia. Nokia's patent accumulation from the 2G era to the present day, as well as Nokia's past "records", are enough to show its strength. Before OPPO, there were very few terminal manufacturers in the world that had the ability to counterclaim against it.
The immediate enemy has not yet been resolved, and InterDigital's attack has arrived again. According to data, InterDigital's team leading the patent licensing and litigation business has many licensing veterans who have worked for Qualcomm, Nokia and other companies. They are radical, strong and experienced, and their strength should not be underestimated. As mentioned earlier, this NPE’s litigation history can almost cover the changes in the global mobile phone market. By relying on litigation to promote negotiations, Interdigital has turned Apple, Samsung, Huawei, Xiaomi, LG, ZTE and other manufacturers into its own customers. . Its strength in the field of patent litigation is also on paper.
Faced with severe intellectual property risks, OPPO has clearly put forward its own intellectual property claims. Feng Ying, the senior director of its intellectual property department, has repeatedly stated: "OPPO respects intellectual property rights and advocates reasonable fees, and advocates the settlement of licensors and licensees through friendly consultations. Disputes between people, mutual respect for the value of patents. On the other hand, OPPO firmly opposes excessive patent fees, resolutely opposes the use of litigation to coerce negotiations and accept excessively high license fees, and advocate the establishment of a healthy intellectual property ecology."
Respect for intellectual property rights is OPPO's consistent attitude, and it should be the consensus of all technology manufacturers. At the same time, respecting intellectual property rights does not mean accepting and asking, and resolutely opposing abuse of litigation and excessively high fees are to safeguard one's own commercial interests and to safeguard the order of the entire industry. This is even more unshakable when risks are heightened.
Of course, OPPO has been doing this for a long time, and this intellectual property claim will not change in the future. Over the past period of time, the OPPO intellectual property team has successfully resolved patent disputes with companies such as Sharp, and reached licensing agreements and even cross-licensing agreements with many patentees such as Sharp, NTT DOCOMO, and Sisvel. In addition, OPPO has almost achieved favorable results in previous global patent litigation. Among them, Siemens sued OPPO's patent in China for invalidation; the Spanish patent company Fractus v. OPPO case was rejected after the patent involved in the litigation was invalidated; Sharp case In China, a large number of Chinese family members involved in the patent litigation have been invalidated, and Sharp was subsequently forced to settle with OPPO; the Italian patent operating company Sisvel came back after a head-on confrontation with OPPO in the Netherlands. This series of achievements shows that the OPPO intellectual property team has the ability to calmly deal with patent litigation worldwide. Therefore, although the risks and challenges of intellectual property rights are unprecedentedly severe, based on its previous record, I believe OPPO’s intellectual property team can properly handle them.
The grievances between InterDigital and Chinese companies
InterDigital is a listed company that relies on patent fees for its livelihood. All R&D investment is converted into patents, and then the patents are used to collect license fees from terminal manufacturers. This business model determines that it must reach a license agreement with as many terminal manufacturers as possible with license conditions that are as beneficial to itself as possible. It is conceivable that it is almost impossible for InterDigital to achieve this goal by purely negotiating means. So using litigation to promote negotiations has become the company's fixed business routine. It is difficult to reach agreement on the licensing fees and conditions for OPPO this time.
According to Jiwei’s previous statistics, in the past ten years, InterDigital has five customers whose revenue accounted for more than 10% (inclusive) for more than two consecutive years. They are Apple, Samsung, LG, Huawei, and Pegatron. Once in court with InterDigital. Except for the lawsuit against Apple which only appeared in InterDigital's financial report and was unclear, the rest of the lawsuits have caused greater impact.
And this litigation strategy has indeed brought a lot of income for InterDigital. Taking Samsung as an example, from 2018 to 2020, the patent fees that Samsung paid to InterDigital were 76.85 million U.S. dollars, 79.73 million U.S. dollars and 78.98 million U.S. dollars, accounting for more than 20% of InterDigital's total revenue that year.
In recent years, with the rise of Chinese terminal manufacturers, Interdigital's lawsuits against Chinese manufacturers have become more frequent. In 2011, InterDigital filed a patent infringement lawsuit against Huawei and ZTE in the Delaware court, and filed a 337 investigation with the U.S. Trade Commission (ITC). In the same year, Huawei sued InterDigital and other companies to abuse its dominant market position in Shenzhen Intermediate People's Court. Since then, InterDigital has fought with Huawei and ZTE for many years. In 2020, InterDigital successively reached a global patent license agreement with ZTE and Huawei, and settled all mutual lawsuits. According to public information, the license agreement is valid until 2023. During this period, Huawei and ZTE's 3G, 4G and 5G products will pay InterDigital royalties.
It is worth noting that in September 2013, the National Development and Reform Commission initiated an anti-monopoly investigation on InterDigital, and in March of the following year, InterDigital submitted an application for suspension of the investigation, which contained a commitment to authorize the unlimited mobile standard essential patent portfolio to Chinese mobile terminal manufacturers. On May 22 of that year, the National Development and Reform Commission suspended the investigation. This five-year commitment allowed InterDigital to suspend its offensive against Chinese manufacturers. However, in August 2019, this commitment expired less than 3 months, InterDigital can't wait to initiate lawsuits against Lenovo in the United Kingdom and the United States. In July of the following year, he took another shot against Xiaomi. Now the global licensing agreement with Xiaomi has been settled. Although the litigation with Lenovo is still in progress, the overall trend of the litigation is also more favorable to InterDigital. If nothing else, the two parties will also end in a settlement.
At the same time, the contribution of Chinese manufacturers to InterDigital's performance has also increased substantially. According to its financial report, InterDigital received more than US$14 million in licensing fees from ZTE in 2019. Although it has not been disclosed in 2020, the volume of licensing fees should not change much; in 2020, the company will collect more than US$30 million in licensing fees from Huawei. In the two quarters, Huawei paid more than US$20 million in licensing fees. In 2021, InterDigital successfully included Xiaomi as its customers, and collected US$45 million in patent fees in the third quarter.
Judging from the payment of a small number of major customers disclosed in InterDigital's financial report, the company's revenue from Chinese companies has doubled in the past two years. It is foreseeable that as more Chinese manufacturers become InterDigital's attack targets, this proportion will continue to grow rapidly.
Increased risk of intellectual property rights of mobile phone manufacturers
In recent years, there have been frequent global patent lawsuits against Chinese mobile phone manufacturers. Mobile phone manufacturers represented by Huawei, Xiaomi, and OPPO have repeatedly suffered patent attacks from overseas patentees. Among them, the cases that have attracted greater attention in the industry include InterDigital and Huawei, Unwired Planet and Huawei, Ericsson and Xiaomi, Nokia and OPPO.
Jiwei.com believes that the intellectual property risks of Chinese mobile phone manufacturers are expected to become more and more severe in the future. The reasons are as follows:
First of all, the most important reason is that the internationalization and market share of Chinese mobile phone manufacturers are getting higher and higher, and more and more overseas markets are "occupied". Intellectual property risks are what mobile phone companies must overcome in their global expansion. The levels and the problems solved are "sweet troubles".
Secondly, as mobile phone communication technology evolves from 4G to 5G, patentees’ "appetite" for charging patent fees is also increasing. A related person from more than one mobile phone company told Jiwei that the distribution ratio of essential patents for 5G standards 4G is more decentralized, which means that more companies and patent operating companies will charge mobile phone companies for patent fees, and the required rates are much higher than 4G. The commercial use of 5G technology is still in the ascendant, and the high patent fees have already caused mobile phone companies. We are "overwhelmed".
Finally, there is the impact of the global epidemic in the past two years. The arrival of the epidemic has made life more and more difficult for some patent operating companies without physical products. According to foreign media analysis, the new crown epidemic has caused a certain negative impact on the charging business of patent operating companies, which has also stimulated companies such as InterDigital to become more and more aggressive in their choice of litigation.
OPPO: Respect intellectual property rights but oppose excessive fees
From OPPO's point of view, the severity of the situation may be unprecedented. Since July this year, Nokia has initiated a massive patent lawsuit against OPPO in the UK, France, India and other countries and regions. Although OPPO has made a beautiful response, it has not only done regular responses, but also counterclaimed Nokia with 5G base station patents in many countries and regions, but it is not easy to fight against Nokia. Nokia's patent accumulation from the 2G era to the present day, as well as Nokia's past "records", are enough to show its strength. Before OPPO, there were very few terminal manufacturers in the world that had the ability to counterclaim against it.
The immediate enemy has not yet been resolved, and InterDigital's attack has arrived again. According to data, InterDigital's team leading the patent licensing and litigation business has many licensing veterans who have worked for Qualcomm, Nokia and other companies. They are radical, strong and experienced, and their strength should not be underestimated. As mentioned earlier, this NPE’s litigation history can almost cover the changes in the global mobile phone market. By relying on litigation to promote negotiations, Interdigital has turned Apple, Samsung, Huawei, Xiaomi, LG, ZTE and other manufacturers into its own customers. . Its strength in the field of patent litigation is also on paper.
Faced with severe intellectual property risks, OPPO has clearly put forward its own intellectual property claims. Feng Ying, the senior director of its intellectual property department, has repeatedly stated: "OPPO respects intellectual property rights and advocates reasonable fees, and advocates the settlement of licensors and licensees through friendly consultations. Disputes between people, mutual respect for the value of patents. On the other hand, OPPO firmly opposes excessive patent fees, resolutely opposes the use of litigation to coerce negotiations and accept excessively high license fees, and advocate the establishment of a healthy intellectual property ecology."
Respect for intellectual property rights is OPPO's consistent attitude, and it should be the consensus of all technology manufacturers. At the same time, respecting intellectual property rights does not mean accepting and asking, and resolutely opposing abuse of litigation and excessively high fees are to safeguard one's own commercial interests and to safeguard the order of the entire industry. This is even more unshakable when risks are heightened.
Of course, OPPO has been doing this for a long time, and this intellectual property claim will not change in the future. Over the past period of time, the OPPO intellectual property team has successfully resolved patent disputes with companies such as Sharp, and reached licensing agreements and even cross-licensing agreements with many patentees such as Sharp, NTT DOCOMO, and Sisvel. In addition, OPPO has almost achieved favorable results in previous global patent litigation. Among them, Siemens sued OPPO's patent in China for invalidation; the Spanish patent company Fractus v. OPPO case was rejected after the patent involved in the litigation was invalidated; Sharp case In China, a large number of Chinese family members involved in the patent litigation have been invalidated, and Sharp was subsequently forced to settle with OPPO; the Italian patent operating company Sisvel came back after a head-on confrontation with OPPO in the Netherlands. This series of achievements shows that the OPPO intellectual property team has the ability to calmly deal with patent litigation worldwide. Therefore, although the risks and challenges of intellectual property rights are unprecedentedly severe, based on its previous record, I believe OPPO’s intellectual property team can properly handle them.