The summer is treating U.S. research and patent licensing firm InterDigital well. Less than a week after netting a strategic victory in a UK patent infringement case against Lenovo, InterDigital (often referred to by its stock ticker symbol, IDCC) today announced a license deal that settles all pending litigation against Chinese smartphone giant Xiaomi. The covered patents include InterDigital's 3G/4G/5G cellular portfolio as well as its HEVC (aka H.265) video codec patents.
The amounts involved are not known, but the volume must be rather significant. Just last month, Bloomberg reported that Xiaomi had overtaken Apple to become the world's no. 2 smartphone maker by unit sales. Xiaomi is truly an amazing entrepreneurial success story, and also has ambitious plans in the electric vehicle market. Maybe Xiaomi will once again manage to "come out of nothing" and rise to the top.
While InterDigital had greater leverage in litigation at this point, Xiaomi has so far been doing a good job demonstrating to patent holders that it is neither a soft target nor an unwilling licensee or "hold-out." Xiaomi seems to have learned the patent licensing and litigation game fast. Given its market share, I guess I'll have to pay closer attention to its future patent cases.
A little over a month ago, Xiaomi already settled with Sisvel.
Other than IDCC making money and being in a stronger position vis-à-vis other implementers, these are the key takeaways:
Xiaomi tried to gain leverage from a Chinese FRAND determination action, but ultimately InterDigital's anti-antisuit injunctions from the Delhi High Court and Munich I Regional Court thwarted that litigation strategy. The Munich A2SI/A4SI in that dispute is now a landmark ruling, as Presiding Judge Dr. Matthias Zigann and his panel laid out a list of criteria that may justify even pre-emptive anti-antisuit injunctions. As a result, immediate and unconditional surrender is the only safe harbor for anti-antisuit defendants in Munich.
InterDigital had appealed the Munich A2SI/A4SI to the Munich Higher Regional Court, but as a result of today's settlement, there won't be any review. At this stage it is questionable whether any A2SI/A4SI will be reviewed by the Munich appeals court ahead of Judge Dr. Zigann's impending promotion.
According to Juve Patent, InterDigital's lead counsel in the Munich A2SI/A4SI action, and possibly also in the recently-filed infringement cases, was Arnold & Ruess's Dr. Arno Risse ("Riße" in German). The key SEP holders among Arnold & Ruess's clients are Nokia, InterDigital, and Sisvel. Despite the Nokia-Daimler and InterDigital-Xiaomi settlements, they'll continue to be busy. Deservedly so.
I guess Lenovo is also going to settle with InterDigital rather soon, with a FRAND trial scheduled for early next year that can get very costly and likely won't save Lenovo money over taking a deal now.
Every settlement frees up litigation resources, so I wonder whom InterDigital will pick as the next target from its list of unlicensed implementers. Maybe an automotive company, for a change? Most of the volume is in smartphones, though.
Munich makes patentees money. In this case, an Indian court also played a key role. But many implementers are more vulnerable in Germany than in India.
Chinese policy makers and judges may already be brainstorming about how they can preserve their country's jurisdiction over cellular SEPs, considering that most smartphones are manufactured in China and the country is also a huge target market. Xiaomi had its reasons for seeking a FRAND determination in China, but in the end other jurisdictions gave InterDigital decisive leverage.
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