Jack Ellis

Huawei’s filing of lawsuits against Samsung Electronics in China and the United States this week – accusing the Korean giant of infringing several of its standard-essential patents (SEPs) relating to 4G and LTE technologies – perhaps shows us that the ‘smartphone wars’ are not quite done just yet. But one of the most intriguing aspects of this latest battlefront is what it may tell us about the extent and sophistication of the Chinese company’s licensing activities.

Huawei filed the suits concurrently in the Northern District of California and the Shenzhen Intermediate People’s Court. In a heavily redacted document detailing its US complaint, the Chinese company alleges that Samsung Electronics and its US affiliates infringe on at least 11 of its SEPs, each of which it claims it has made available for licensing on FRAND terms.

The known patents-in-suit in the US litigation are as follows:

Huawei is the original assignee for all of the assets except the ‘583 patent. Sharp was its original owner, having transferred it along with several other patents to the Chinese company in May 2013 (the Japanese company has made several patent assignments to Huawei in recent years).

Earlier this month, reports were widely circulated by both Chinese- and English-language media suggesting that Huawei was making hundreds of millions of dollars in licence fees and royalties after signing a patent licensing agreement with Apple (we can speculate that the proliferation of these rumours just a few weeks before the launch of lawsuits against Samsung may not be entirely coincidental). As I stated at the time, those reports were premature at best, seeing as none offered any sources or references with which to verify their claims.

But, with a little bit of extra digging, news of Huawei’s spat with Samsung does allow us to throw some more light on the situation involving Apple. Using the Google Patents search engine, I was able to identify Chinese equivalents for 10 of the aforementioned US patents. The ‘239 patent appears to have no corresponding application filed with China’s State IP Office (SIPO).

Then, using SIPO’s online transactions database (in Chinese, here), I was able to find licence agreement records for each of the relevant SIPO applications, confirming that they were among those that Huawei licensed to Apple late last year. The licensing deal was recorded with SIPO under contract registration number 2015990000755 on 21st October 2015.

It is worth noting here that, while recordal of licence agreements is not compulsory in China, it is typically recommended; for example, the information may prove useful for accounting or enforcement purposes, or might be used by Chinese courts to determine damages in a patent infringement case. As such, the record of Huawei’s licence deal with Apple – which was apparently entered into without having to resort to litigation – regarding the same patents is likely to be a key matter for the consideration of the Shenzhen court as the case against Samsung progresses.

Sources previously informed me that the agreement between Apple and Huawei is global in its coverage, and we can safely assume that US equivalents were licensed too. We can’t say for sure what weight the SIPO licence records might have in US district court proceedings, but it is probably fair to say that the financial details of the Apple deal are going to be crucial should Huawei’s Northern California complaint against Samsung go to trial. We may yet find out just how much money Huawei makes from licensing its patents to Apple and others.

Nevertheless, it is still important to reiterate that royalty income is unlikely to be the primary motivation behind the Chinese company’s licensing strategy. “Thus far, we have signed cross-licensing agreements with dozens of our competitors,” Ding Jianxing, head of IP portfolio management, licensing and litigation at Huawei Technologies, is quoted as saying by the BBC in reference to the Samsung litigation. “We hope Samsung will respect Huawei's R&D investment and patents, stop infringing our patents and get the necessary licence from Huawei, and work together with Huawei to jointly drive the industry forward.”

As Ding seems to indicate, the more valuable prize for the Chinese company may be a cross-licence pact with Samsung, which remains the world’s leading smartphone maker by a significant margin. While Huawei would surely welcome the FRAND compensation it might stand to collect from such a large vendor, elimination of the risk presented by Samsung’s patent portfolio – probably the largest in the world – may be far more valuable.