On December 9, Chinese telecommunications conglomerate Huawei and smartphone maker OPPO announced the signing of a global patent cross-licensing agreement covering cellular standard essential patents such as for 5G. Shen Hongfei, the vice president of Huawei’s legal department, said in an interview that with this agreement, OPPO paid for the license of Huawei’s advanced 5G technology, and Huawei also obtained the patent license for OPPO’s wireless standard technology.
The so-called cross-licensing agreement means that both parties license each other’s patents. In such agreements, which party pays the license fee to the other party depends on the value and market conditions of both parties.
The cost of patents in the mobile phone industry is not negligible. One intellectual property industry insider told Jiemian News that a smartphone involves about 100,000 patents and more than 400,000 patents are involved with the whole smartphone industry. If a company pays according to the patent fee required by the patent owner, the cost of the patent fee will be one third of the cost of a mobile phone, and it may even exceed the hardware cost.
Chinese smartphone manufacturers are increasingly aware of the importance of patents and technical strength. Huawei and OPPO are companies with relatively complete patent systems. On September 5, China’s Intellectual Property Development Research Center of the Intellectual Property Office released the Report on Invention Patents Authorized by Private Enterprises in China (2021). Huawei ranked first with 7,630 invention patents, Tencent ranked second and OPPO ranked third. In addition, vivo, Gree, BYD, Lenovo, BYD, Baidu and other enterprises also entered the top 10.
According to the previously mentioned intellectual property insider, the premise of reaching a patent cross-licensing agreement is that both parties are equal at a technical level and in patent reserve quantity, and they recognize each other’s patent value and are willing to pay for it. The mutual recognition of the two major leading manufacturers also shows the improvement of the overall patent strength of Chinese firms.
According to data released by Huawei, in the past year, the firm has reached nearly 20 new license agreements in the fields of smartphones, smart cars, networks, IoT, and more. Partners include Samsung, OPPO and other manufacturers, among which OPPO is the largest company with the most patents.
Shen Hongfei also mentioned that most manufacturers have expressed their willingness to pay for patents to Huawei, but the rates are still under negotiation. Huawei estimates that about 350 million 5G mobile phones have been licensed by Huawei this year.