Titanium Media reported on March 16 that Huawei stated that in order to promote openness and transparency and 5G technology applications, and balance innovation protection and industry development, Huawei will charge royalties for 5G patents from 2021 and will provide prices applicable to 5G mobile phones. Reasonable percentage rate, and the upper limit of a single license fee is 2.5 US dollars.

Both Huawei and Qualcomm are holders of a large number of core communications patents, and they cannot be bypassed with 5G. I remember that Huawei and Qualcomm had a patent cross-licensing agreement before, and then Huawei paid a certain amount of patent fees to Qualcomm every year to sell Huawei mobile phones. Because of the existence of cross-licensing, Huawei pays much lower patent fees than other mobile phone manufacturers. Samsung, Xiaomi, ov and other manufacturers directly purchase Qualcomm chips and pay patent fees in accordance with Qualcomm’s patent fee model. At the same time, they are protected by Qualcomm’s patent pool and enjoy the right to use patents obtained by Qualcomm’s cross-licensing. Qualcomm’s patent fee rate is very high, and it is calculated in accordance with the price of the whole machine, and has been heavily fined by regulatory agencies in various countries many times. After Qualcomm was fined 6.088 billion yuan in China in 2015, it lowered its fee rate and reached a new authorization fee agreement with the National Development and Reform Commission. Apple also filed several lawsuits because of the unreasonable charging model of Qualcomm, but finally succumbed to the pressure of 5G and settled with Qualcomm for $4.5 billion. The iPhone 12 series can use the Qualcomm X55 baseband. The crux of the problem now is that, subject to US sanctions, the supply of Kirin chips for Huawei mobile phones has been cut off, sales are shrinking day by day, and the pressure on revenue decline has increased. Huawei’s mobile phone sales are declining, and the need to pay patent fees will naturally decrease, so the original patent authorization model will naturally no longer apply. Therefore, Huawei proposes to charge Samsung and Apple patent fees, which is a very reasonable request. After all, their respective patents are obtained from their own hard research and development. What needs to be observed is: How will Huawei and Qualcomm negotiate? Does the original cross-licensing agreement apply? After all, all households now use Qualcomm’s 5G chips. Qualcomm will bear the increased cost due to patent fees? Increase chip prices? Or will it be passed to downstream terminal manufacturers such as Samsung and Apple, and Huawei will directly charge them? How does Huawei charge domestic terminal manufacturers Xiaomi, OPPO, and vivo? How will this matter affect Qualcomm’s patent charging model and rates in the future? In short, Huawei’s patent fee requirements are reasonable, and again it shows that only by mastering the core technology can we have the initiative. I hope that the localization of chip manufacturing will be faster. Note: For non-professional legal and communications practitioners, this is only for personal understanding. Any errors are welcome to point out.


By zhiwo

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7 months ago

It should be collected. The upper limit of US$2.5 is considered to be very small. Maybe Huawei’s rank is high. It is not that the United States suppresses me like ordinary people think. Now that the mobile phone is not easy to make, then I will pay a lot of attention to the patent fee. Open up. Compared with Qualcomm, the price is far too low. Qualcomm seems to charge a few to five percent of the price of the whole machine. Huawei’s charging cap is only US$2.5 per unit. In this way, Huawei is very kind no matter how it counts. As for some friends who say that these costs will be passed on to consumers, Huawei’s so much R&D investment is also money, and all have costs. The annual investment of more than 100 billion is real money. Don’t other companies like Qualcomm, Samsung, Nokia, etc. have to charge patent fees for your mobile phones, or you have to spend money on parts. This can’t be passed on to consumers as soon as Huawei collects some patent fees. What’s more, Huawei’s charge limit is only US$2.5. Your cheapest mobile phone is a few hundred, to a few thousand yuan, which is only a dozen yuan in RMB, which is only the upper limit. In many cases, it is not so high. (By the way, I forgot to mention earlier. Huawei is still a big taxpayer. It pays more than 100 billion taxes a year and collects patent fees from all over the world, but part of it is paid in tax. What’s wrong?) It used to be a mobile phone, etc. Wait, there are too many ways to get money. It is estimated that the royalties will be more than 1 billion US dollars a year. At that time, it was really troublesome, and I didn’t bother to toss about it. . Besides, only by giving the corresponding fierce innovation to it, everyone will do more research and innovation, otherwise, who will develop technology if it is thankless.

7 months ago

A few technology companies, such as Huawei, Qualcomm, Nokia, and Ericsson, have many communications-essential patents. Huawei owns about 20% of 5G patents. Nokia announced the charging standard in August 2018, a fixed single-unit license fee, which does not exceed 3 euros per mobile phone. Ericsson announced the standard in March 2017, a fixed single-unit license fee of US$2.5 to US$5 per mobile phone. Qualcomm announced the standard in November 2017. The patent licensing rate for single-mode 5G mobile phones (mobile phone net selling price) is 2.275%; single-mode 5G mobile phones in 5G mobile phones that use Qualcomm’s mobile network standard core patents + non-core patents are consolidated Machine 4%. The patent licensing rate for multi-mode 3G/4G/5G mobile phones is 3.25%. At the same time, the 5G mobile phone multi-mode 5G mobile phone that uses Qualcomm’s mobile network standard core patent + non-core patent is charged at 5%. The net price of a capped phone for which Qualcomm charges a patent fee is US$400. It can be seen that Qualcomm’s patent fee is very high, 2% to 5% of the price of the whole machine. Huawei charges very low and charges very late. It is worth mentioning that Huawei and Qualcomm have cross-licensed patent fees, but there are also disputes. In the complex background last year, Huawei should have regressed and paid Qualcomm a few years of patent fees, that is, US$1.8 billion in patent fees. Why does Huawei charge now? Why set up the current charging model? At present, the main version of the 5G standard is relatively mature and frozen. Data shows that Huawei’s technical contribution to the 5G standard accounts for as high as 20%. This enables Huawei to judge and formulate a reasonable and balanced rate that matches its own contribution. , And open and transparent to the industry at the opportune time of the first year of 5G large-scale commercial use. It is reported that Huawei has fully considered the cost expectations of manufacturers when formulating the rate standards. As an important 5G standard technology contributor, it hopes to solve the uncertainty of the cost of digitalization in various industries, so that it is conducive to the formulation of long-term development strategies for various industries. It will ultimately benefit the people. Huawei believes that setting a reasonable charging standard for 5G rates is a return to Huawei’s continuous investment in the 5G field for many years, and it is also a protection. It can promote Huawei to maintain the driving force for innovation and continue to create value for the industry and society. According to international practice, Apple has paid Huawei patents. But apart from Apple, many other mobile phone manufacturers did not pay Huawei much patent fees. Now, it is estimated that many mobile phone manufacturers have to pay patent fees to Huawei, just as they pay patent fees to Qualcomm, Ericsson, and Nokia. It is reported that Huawei invests 10% to 15% of its revenue in R&D each year, and has invested more than US$90 billion in R&D in the past ten years. According to the latest “2020 EU Industrial R&D Investment Ranking”, Huawei ranks third in the world. In the past 20 years, Huawei has conducted extensive cross-licensing negotiations with major patent holders in the ICT industry. At present, it has signed more than 100 patent licenses and cross-licensing agreements with major ICT manufacturers in the United States, Europe, Japan and South Korea. In my opinion, the cost of innovation and creation for enterprises is very high, and if someone else uses it, it should be charged for patent fees, but the amount of fees charged is very important. Too many fees hinder the application of new technologies. If there are less fees, companies will have no incentive to innovate. The lower fees announced by Huawei this time have actually set an example for many technology manufacturers.

7 months ago

Agree with both hands! For one thing, Huawei has also applied for a patent for the technology that Huawei has worked so hard to research for so many years. Shouldn’t other companies use it to make money, shouldn’t they pay patent fees? Isn’t it justified by the emotions, the reason and the law, whether it is for foreign or domestic companies? Second, Huawei did not charge patent fees in the past because of patent cross-licensing issues with companies such as Qualcomm. To put it simply, you used my patents, and I also used your patents, which should have been charged for each other, but now they are not charged anymore. Everyone can exempt them from each other. But nowadays Huawei’s chip and baseband mass production is a problem, and the use of other people’s patents has been greatly reduced, but other companies are still using Huawei’s patents in large quantities. The previous patent cross-licensing cooperation is obviously not equal to today. Some people still think that Huawei shouldn’t charge patent fees. Is Huawei really a charity? Third, in recent years, Huawei’s self-developed technology is well-known worldwide. In the past, when Huawei’s mobile phone business was in full swing, it could rely on terminal revenue to make up for the huge R&D expenses. However, Huawei’s business volume has shrunk significantly now, which is not what it used to be. If you want to get back to the market and solve problems in the future, Huawei’s terminal will not be able to reduce the flow of research and development, and it must open the source of patents. Four articles, “Made in China” has been mentioned for so many years. This is not a simple slogan. It will eventually be implemented in a healthy business model. Chinese technology companies should have started a large-scale use of self-developed technologies and patents. It’s a new era for Fangfang to make money. Everyone may wish to think about it. If a technology company like Huawei, which has persisted in self-research for many years and has a brilliant record, fails to collect patent fees and eventually collapses, then who else would dare to invest so much in the future to immerse themselves in technology? Are we going back to the era of splitting accounts with foreign companies? The patented bowl of rice can be eaten by Qualcomm, Nokia, Ericsson, and these established foreign companies can all eat it. Why can Huawei just not eat it?

7 months ago

I predicted this matter last year. As long as Huawei is ready to fade out of the mobile phone market, it will inevitably begin to charge patent fees. Huawei’s refusal to make mobile phones is not good for all mobile phone manufacturers. The reason is obvious. If you make your own mobile phones, you need to use someone else’s patents. Therefore, they generally license each other for free. Once you don’t make mobile phones and don’t rely on other patents, you naturally need to start collecting patent fees. Therefore, in the mobile phone industry, those who charge patent fees are manufacturers who do not make mobile phones themselves. Therefore, if this news is true, it roughly indicates that Huawei may be really ready to gradually withdraw from the mobile phone market.

7 months ago

It is Huawei’s own business whether to collect it or not, and it is a very reasonable thing to collect it. After all, after spending so much money on research, all that was paid was my own real money. Coupled with the fact that Huawei’s chips are now stuck at the manufacturing end, the revenue of the mobile phone business will definitely be greatly reduced, and it is inevitable that revenue will decrease. With so many employees like Huawei, it also invests huge amounts of research and development expenses for scientific research every year, and income and expenditure will definitely be affected. Therefore, income must be increased. 5G and mobile phone services have suffered unfair treatment, and patent fees will naturally be on the agenda. Besides, the price is really kind. I remember that Qualcomm’s 4G patents are charged according to a percentage.

7 months ago

Royalties are the easiest sum of money to earn, much like a landlord lying down collecting rent. I am extremely happy to see that more and more Chinese companies can earn more and more patent fees in the global market. The 5G mobile phone patent fee standards of other communication companies are: Nokia introduced a patent fee standard in 2018, and each 5G mobile phone does not exceed 3 euros. Ericsson introduced a patent fee standard in 2017, charging US$2.5 to US$5 per mobile phone. Qualcomm will charge a patent fee of 2.27% to 5% of the price of the whole machine according to the number of patents used. In August last year, Huawei reached a settlement with Qualcomm and will pay US$1.8 billion in patent fees, of which US$1.2 billion was generated before the end of 2019, and US$600 million was generated in the first half of 2020. You can simply estimate Huawei’s revenue expectations on mobile phone 5G patent fees. In the past year, global smartphone shipments amounted to approximately 1.2 billion units, of which approximately 300 million were 5G mobile phones. Some agencies predict that 5G mobile phone shipments in 2021 will be about 500 million units. So if it is collected in accordance with the upper limit, Huawei will receive at most US$1.25 billion in patent fees. This money is definitely a lot, but not too much for Huawei. Huawei’s patent accumulation comes from its emphasis on research and development and large investment. In 2019 alone, Huawei’s research and development expenses exceeded 130 billion yuan, and the total in the past 10 years exceeded 600 billion yuan. It can be seen that the cost of technological innovation is very high, so it is only natural for companies to charge a reasonable level of patent fees. It’s just that Huawei is now facing a very big challenge, and its consumer business, which is dominated by mobile phones, has been hit hard by sanctions. Consumer business is the main source of Huawei’s revenue. In the first half of 2020, Huawei’s revenue (not profit) is about 450 billion yuan, of which consumer business accounts for half. What will happen to the consumer business next is not yet known. The US$1 billion patent fee is still too small compared to Huawei’s volume. I hope that Huawei will continue to bring more good news.

7 months ago

I think this method is very good. The fee is reasonable, well-documented and well-received. This should be done from the day the US sanctions.

The remaining question is, will the United States behave as a hooligan, will it refuse to pay this fee? If the United States does this, it will undoubtedly damage the international patent system. How should we deal with it?

7 months ago

Normal, in my opinion, it is not normal not to accept. Think about Qualcomm’s patent fees in the 4G era. . . Let me say that the US$2.5 per unit is still too small, and it is appropriate to charge it as a percentage of the price of the whole unit. However, it is understandable that after all, the thousand yuan machine has no profit. If the thousand yuan machine is received as a percentage of the whole machine price, the price of the thousand yuan machine is likely to increase. In the end, it is the consumers who are injured. In a special period, Huawei used the same method as others to generate income, and it also received less than others, which is already worthy of praise.

7 months ago

The price closed down, which is much lower than Qualcomm. The upper limit of only 2.5 US dollars, Qualcomm is based on the percentage of the mobile phone price. The more expensive the mobile phone, the more it will receive. If this implementation continues, it is estimated that Apple and Samsung will receive a little less, because these two companies have patents that overlap with Huawei, and the domestically produced products are expected to receive more. This is also spurring other domestic products to increase R&D. Huawei’s R&D in the past two decades is now the time to harvest.

7 months ago

Reasonable business behavior is a very normal response of Huawei under the current circumstances. Cross-licensing probably has two effects. One is that it can save money, and the other is that it can avoid the risk of patent applications in places where patents are not registered (to prevent being targeted by patent hooligans). But there is a prerequisite for these two functions, that is, my machine can be sold in non-patent areas and can sell a good order of magnitude, so as to save money and avoid risks. With the current ban, continuing to cross-authorize will not only save money, but actually spend a lot of money to obtain 5g-related cross-authorization that can only be useful if you can sell mobile phones for no reason. On the premise that there is not much hope for open source for the time being, reducing this flow is an inevitable move in despair. Therefore, charging is a reasonable business practice, and it is also a normal response to Huawei’s current situation. The main question is, as Gao Zan said, whether to indirectly increase the license fee through Qualcomm or directly collect the license fee from other manufacturers. If it is indirect, Qualcomm may have to be antitrusted once (the tax rate was re-set after the antitrust). It’s more troublesome, but it won’t be the fundamental problem. We must firmly believe that the sound of the apes on both sides of the strait can’t stop, and the boat has passed the ten thousand mountains.

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