A few hours ago, Huawei and OPPO announced a patent cross-license agreement. The identical announcement (apart from the order of company names and quotes, and some boilerplate information) is found on both companies' websites (Huawei press release, OPPO press release). Either company is based in Shenzhen, China.
Most patent license agreements that--like this one--fall into place without litigation are not announced unless they account for a large part of a publicly-traded (net) licensor's revenue. Today's announcement is important for the wireless industry at large. Huawei has what is arguably the most powerful patent portfolio in the wireless sector--even according to some studies I don't otherwise agree with--and remains a major implementer despite geopolitical impediments. OPPO makes hundreds of millions of devices a year, but is not just an implementer: it has ramped up its own patent filings, making it one of the top filers in this segment by now.
In the press release, Huawei's IP chief Alan Fan underscores the need to respect IP and the virtuous cycle of innovation and licensing:
"The mutual recognition of intellectual property value between companies is a major step towards fostering a positive cycle of innovation and research in high-value standards: investing, receiving returns from investment, and then reinvesting. This will enable our industry to keep innovating and provide consumers with more competitive products and services."
Mr. Fan's counterpart at OPPO, Chief Intellectual Property Officer Adler Feng, equally supports sustainable innovation, but places even greater emphasis on balance and on avoiding litigation:
"We will, as always, advocate for the establishment of a sustainable, healthy intellectual property ecosystem, where intellectual property licenses can be resolved through amicable negotiations and every company's patent value are highly respected."
The last part of Mr. Feng's statement refers to the "cross" in the word "cross-license": unless OPPO's counterpart is a non-practicing entity, OPPO also brings lots of patents--especially true 5G patent (patents that do not merely read on the 5G standard but were specifically developed for 5G purposes)--to the table. A license agreement between a company like Nokia and OPPO is not a one-way street.
Today's Huawei-OPPO announcement strongly suggests that some other companies should make more of an effort to reach similar deals with OPPO and Huawei.
Huawei's patent portfolio is younger, bigger, and stronger than Nokia's. Whatever Huawei and OPPO agreed upon is going to be a comparable license agreement of the most relevant kind. There currently is a FRAND determination case underway in a Chinese court (Chongqing Intermediate People's Court) that OPPO asked to resolve the licensing dispute with Nokia. The terms of the Huawei-OPPO deal will presumably bear significant weight with the judges.
As I showed last week, litigation between Nokia and OPPO is pending in approximately 20 venues (also including the Federal Patent Court of Germany, but not counting patent offices like the EPO). The battlemap spans four pages (click on an image to enlarge; this post continues below the images):
Nokia alleges that OPPO is an unwilling licensee, but since about the time that Nokia started its enforcement campaign, OPPO has actually struck some interesting license agreements such as with Sharp and Sisvel--and now with Huawei.
At the same time, the fact that Huawei secures many licenses--now also the one with OPPO--without a need for litigation calls into question the behavior of implementers Huawei has recently felt forced to sue.
Against WiFi device maker Netgear, Huawei has already obtained a default judgment in Dusseldorf, Germany. Huawei is also enforcing WiFi patents against Netgear's German competitor AVM. A first hearing in a Huawei v. Amazon case took place yesterday (unless it was rescheduled). And last month various cases filed against the Stellantis automotive group (Fiat Chrysler, Opel, Peugeot etc.) became known as well. On that occasion, Huawei told Germany's Wirtschaftswoche ("business week") magazine that it prefers to conclude license agreements through negotiation, but some implementers just aren't prepared to sit down and work it out.
I'm sure that Huawei is the net licensor under the deal with OPPO, but if OPPO--which sells a substantial percentage of its products in very price-sensitive markets--was able to accept those terms, why don't Stellantis, Amazon, Netgear, and AVM?
And why does Nokia have to continue to litigate against OPPO? Maybe Nokia applies too much of a Western standard--meaning high device prices--to OPPO instead of taking into account the economic parameters of OPPO's business. A royalty rate that may appear acceptable in Germany is not necessarily the right one for China, India, and Indonesia. This is a heterogeneous world.
OPPO's major Chinese rival is Xiaomi. I don't know whether Huawei and Xiaomi have a license agreement in place, but in case they don't, Xiaomi would now be well advised to work it out with Huawei as well.