1 Aug
2018

Roundtable: China looks ahead to 5G

As 5G moves closer to becoming a reality, Chinese firms are set to play a major role. Stakeholders from key Chinese and foreign contributors and implementers discuss the most urgent IP issues they face going forward

The fifth generation (5G) of wireless technology promises a sea change. In addition to an upgrade in existing connection speeds and data volumes, it will bring interconnectivity to a wider range of devices and empower the invention of totally new technologies. Patents in the 5G area are characterised by their broad applicability across industries. All that additional activity means that a lot of new stakeholders in totally new industry verticals will be entering the licensing space. And we do not yet know exactly what that will look like.

But one thing we do know is that China is going to play a bigger role than ever before. In previous iterations of global telecommunications standards, Chinese companies have largely been implementers rather than developers of the key underlying technology. This will not be the case with 5G. This June, the 3rd Generation Partnership Project (3GPP) formally approved the independent 5G New Radio specification – the long-awaited final 5G standard. Over the course of 5G’s development, Chinese technology companies have played a bigger role than ever before in standard setting. Huawei, Nokia, Hisilicon, Ericsson and ZTE make up the top 5G contributors, according to a recent IAM industry report written by Tim Pohlmann. That means that three of the top five developers come from China (Hisilicon is fully owned by Huawei). Lenovo and China Mobile have both increased their contribution to 5G greatly compared to the 4G process and both feature in the top 20 list for 5G technologies. In addition, Chinese smartphone makers Xiaomi, OPPO and Vivo have emerged as brand new players this time around.

This roundtable brings together experts with deep insights into 5G’s background and practice in China. We have asked them to discuss new challenges and opportunities in the innovation, protection and licensing of 5G technology. They are: Ira Blumberg, vice president of intellectual property at Lenovo; Yu Nanfen, director of 5G and future technology IP policy at Huawei Technologies, Feng Ying, head of intellectual property at OPPO, Hu Shengtao, director of IP rights policy at Ericsson; Jia Xiaohui, patent manager at China Mobile; and Wang Peng, associate researcher and director of intellectual property at TD Industry Alliance. Their views do not necessarily represent those of their organisations. The roundtable was originally published in IAM’s Chinese language edition.

Meet the panel

Ira Blumberg is currently a vice president of intellectual property at Lenovo, where he is responsible for its patent management and licensing business. Before joining the company, Blumberg held senior patent licensing positions at Intel, Rambus and Intellectual Ventures; previously he worked at law firms Hughes Hubbard and Reed and Wilson, Sonsini, and Goodrich & Rosati.

Yu Nanfen is director of 5G and future technology IP policy at Huawei Technologies. She is currently responsible for IP policy issues involving 5G and IoT, monitors Huawei’s IP licensing strategy in 5G and IoT and represents Huawei in IP policy discussions in the industry. Ms Yu has worked in IP licensing for over 10 years and is also chief IP contract lawyer at Huawei, providing legal advice for the firm’s major IP licensing, litigation settlement and IP transaction agreements.

Feng Ying is currently head of IP rights at OPPO and is responsible for IP protection, transactions, licensing negotiations, litigations and anti-monopoly lawsuits. Prior to this, he worked on electronics and communications patent applications and litigation dispute resolution at Huawei and has also worked at Shenzhen Ruizhi Patent Office.

Hu Shengtao is director of IP policy at Ericsson. She previously worked at the treaty and law department of the Ministry of Commerce for more than 10 years, where she was mainly responsible for multilateral and bilateral negotiations on IP rights, negotiations on free trade agreements, negotiations on bilateral investment treaties and domestic legislation work in international economic and trade fields. Besides this, Ms Hu also worked at the economic and commercial section of the Chinese embassy in the United States for two years, where she was mainly responsible for China-US affairs involving IP rights and antitrust.

Jia Xiaohui is currently a patent manager of China Mobile Communications Group Co, Ltd. He is also a senior member of the China Institute of Communications and an expert in the national IP expert base.

Wang Peng is currently director and associate senior researcher of the IP department of the TD Industry Alliance. He once worked at the Patent Examination and Collaboration Beijing Centre of the State Intellectual Property Office and the Chinese Academy of Sciences. Mr Peng is mainly engaged in the collaborative use of industrial patents, the study of SEP rules, and the analysis and evaluation of patents in the industry.

Q: What are the key features of 5G for your company? Which part of the 5G ecosystem does your organisation fit into?

Ira Blumberg

Vice president of intellectual property at Lenovo

“Courts that force a licensee to take a ‘worldwide licence’ or face exclusion provide completely one-sided bargaining power for the patent owner”

Ira Blumberg (IB): Lenovo is focused on two primary aspects of 5G. On the infrastructure side, we are working on server products that can integrate with the radio base station to provide support for the enhanced capabilities of 5G. On the user terminal side, Lenovo – like all other mobile phone companies – is developing handsets capable of taking full advantage of the improved speed, connectivity and features that 5G will provide. In addition, Lenovo, like most other PC companies, will offer 5G capabilities across its mobile PC product line.

Yu Nanfen

Director of 5G and future technology IP policy at Huawei Technologies

“A more transparent, predictable and reasonable royalty for 5G SEPs is very important to facilitate industry development”

Yu Nanfen (YN): The 5G technology is being used to set up flexible, reliable and secure wireless networks to connect all applications and services for a mobile internet, which will cover everything in our daily lives. Compared with 2G, 3G and 4G networks, the 5G network boasts a broader bandwidth and a higher data rate, as well as the capability to connect billions of Internet of Things (IoT) devices, facilitating application scenarios where mobile bandwidth, low delay transmission and mega-scale networking are required. As the world’s top ICT solution supplier leading the commercial deployment of 5G networks, Huawei is carrying out 5G pre-commercial tests with some 30 top carriers in over 10 cities around the world.

Feng Ying

Head of intellectual property at OPPO

“OPPO hopes for a reasonable intellectual property right charging system”

Feng Ying (FY): OPPO has no plan to enter the upstream of the industry (eg, chip development). Instead, we will focus on providing consumer-oriented quality products. In terms of 5G standard participation, OPPO already has a dedicated 5G technology team participating in the creating 5G standards and is accumulating relevant IP rights related to 5G.

Hu Shengtao

Director of IP policies at Ericsson

“Further policy initiatives should not encourage a shift toward proprietary technologies that could threaten interoperability”

Hu Shengtao (HS): The 5G standardisation process is highly innovative and complex. Ericsson’s pioneering research and early collaborations with academia and other industries are providing essential input to develop a standard that meets the needs of different industries and society. In addition, it is deeply involved in all areas and has established aggressive performance targets of end-to-end systems in the 5G standardisation work being undertaken.

In key technology areas (eg, 5G wireless access, 5G core, 5G security, 5G sustainable development and other 5G-related inventions), Ericsson has made important contributions of which we are particularly proud. These technologies will significantly influence the performance of 5G systems.

Wang Peng

Associate researcher and director of intellectual property at TD Industry Alliance

“FRAND should also take the regional characteristics of patents, scale of local industries, and local development status into account”

Wang Peng (WP): TD Industry Alliance, the first of its kind in China, has not only coordinated and promoted 5G technology R&D and patent cooperation among traditional mobile communication companies, but is also cooperating with other industry organisations across automobiles, energy and medical. Coordination in setting 5G-related rules helps to reduce patent risk in convergence.

Q: How will the transition to 5G affect your company’s IP and patent strategies?

IB: Lenovo recognises the importance of 5G and is actively participating in the standard-setting effort. It has contributed to the 5G standard and will continue to be closely involved in developing and refining it. As part of this process, Lenovo – like other participants in the 5G development effort – has been focusing on filing patents related to the standard; 5G is and will remain a key focus area for patent filing for Lenovo for at least the next five years.

YN: There are no significant differences in work related to 3G, 4G or 5G-related patents. Corporates share patents with industry in order to drive technological advances and industrial development while seeking patent protection. Of course, 5G will become an important technology that enables the Internet of Vehicles and IoT. Compared with 4G technology, 5G technology should enjoy a more flexible licensing policy for wider application in various sectors.

Huawei started to invest heavily in 5G R&D in 2009 and has been leading 5G innovation at the technology, network and industry levels. It has also been proactively participating in discussing and formulating 5G standards. From 2015 to the end of December 2017, Huawei submitted more than 6,800 5G proposals to 3GPP.

FY: I agree that there is no big difference of 5G patent work. However, the formulation of 5G standards will involve more participants than ever. OPPO will continue to accumulate our own 5G IP rights and reduce the cost of IP rights in products.

HS: Licensing 5G patents coupled with the development of IoT standards will help to connect billions of devices but this will only be possible when companies come together to exchange ideas. As we look forward to a future with an increasing number of connected devices as part of 4G Evolution and 5G, it is key that we focus on the value that cellular technology brings when considering and deciding on proper royalties.

Jia Xiaohui

Patent manager at China Mobile

“The design of 5G patent licensing rules should be subject to economies’ development levels and their technical contributions to different industries”

Jia Xiaohui (JX): China Mobile has set up a 5G joint innovation centre to share R&D resources with global partners, as well as to strengthen cross-industry patent cooperation. Patent competition and cooperation is becoming more complicated. There will be more and more companies involved in 5G. As a result, there are more cooperation options, but also more intensified competition.

Q: How is your organisation managing the 5G transition across the IP function, standardisation team, business units and any other relevant departments?

IB: Lenovo has a dedicated team working to develop 5G technology and participating in the 5G standard-setting process. This works closely with Lenovo’s patent group to ensure that all inventions are captured and the most promising ones are filed as patents. The 5G technology team also works closely with Lenovo’s product teams to facilitate coordination on product development and 5G integration.

YN: It is important to remember that 5G is just one of many numerous technologies. Corporates should arrange patent layout in such a way that they can exploit the full patent potential and achieve cost-effectiveness based on their own market conditions.

FY: OPPO has a dedicated 5G standard team. We will accumulate our own 5G IP rights and continue to acquire assets that are relevant and necessary. OPPO files 5G patents through the Patent Cooperation Treaty first. We follow the 5G standardisation process to determine the countries in which these patents need to be filed and then modify the patents, to make sure patent applications align with the standards and can generate high value. OPPO’s 5G patent strategy is mainly designed to increase its IP rights, but not to monetise externally. However, we hope to use our assets to achieve cross-licence, as well as to reduce patent royalty while negotiating with some major patent owners.

HS: Ericsson has already submitted hundreds of IP rights to ETSI that relate to inventions that may be or may become essential to the 5G NR standard when adopted. As the first release of 5G NR approaches, Ericsson continues to contribute heavily to the development of the standard with its innovative ideas.

As just one example, in 2016 Ericsson filed its 5G foundation patent application. By incorporating numerous Ericsson inventions into a complete architecture for the 5G network standard and filing it as a pioneering 5G patent application, the company is helping to lay the foundation for all future mobile networks.

JX: For the 5G patent planning, the first thing is to start the 5G technology R&D as early as possible. Second is to enhance innovation and application based on deep understanding of the future demands. Good 5G patent planning and operation require companies to have both seamless coordination between internal standardisation and patent teams, and smooth cooperation with external partners as well.

WP: Industry organisations need to consider common issues. We have set up a platform for communication and cooperation among corporates, governments and international organisations. It provides opportunities for mobile communication companies and industry organisations to study common issues together and reach agreements on issues like patent disclosure and licensing. We also help government and international organisations to recognise consensual opinions in the industry. TD Industry Alliance is committed to constructing a 5G patent disclosure platform to offer the industry a simple and efficient way to disclose SEPs and obtain reliable 5G patent information.

Q: What are your expectations of what 5G patent licensing will be like, and/or suggestions for what it should look like?

IB: Lenovo certainly hopes that 5G patent licensing will be more orderly, transparent and reasonable than has been the case for 3G and 4G SEPs. At least one large patent pool, Via, has announced a desire to aggregate 5G patents and license them on reasonable terms. Other patent pools may also be interested in working on 5G. A well-run patent pool with patents from multiple large patent owners that subscribes to the principles of transparency and truly equal terms for all licensees would certainly make 5G licensing more certain, efficient and pleasant.

YN: 5G technology will be embedded into an increasingly diverse array of devices, igniting new product forms and stimulating industrial sectors that have not traditionally relied on ICT solutions. A more transparent, predictable and reasonable royalty for 5G SEPs is crucial to facilitate this industry development – a one-size-fits-all approach is not desirable in the 5G context.

FY: Before 4G technology, several large companies – including Qualcomm – held most standard patents and set extremely unreasonable licensing rates for end-product manufacturers. The latter had weak bargaining power during negotiations. Therefore, OPPO considers the accumulation of its own IP rights in the 5G era to be a top priority. Despite this, we hope a reasonable IP right royalty to be established under the guidance of administrative organisations and courts. This would help end-product manufacturers to reduce financial burdens, to improve overall IP rights awareness, as well as to promote healthy industry development.

HS: FRAND licensing is a success story and will continue to foster growth and innovation in 5G and IoT. The current FRAND system strikes an important but delicate balance between technology contributors and technology users. Further policy initiatives in this field should not undermine incentives for technology developers to invest in open and standardised technology. Likewise, they should not encourage a shift toward proprietary technologies that could threaten interoperability between equipment from different vendors, leading to user lock-in and reduced consumer choice.

Early last year Ericsson announced a reference framework for industry participants to access its patented R&D in 3GPP 5G/NR standardised technology. This was designed to establish licensing terms and conditions for those who seek a licence to use Ericsson’s portfolio of cellular SEPs, with coverage for multimode mobile handsets that fully conform to 3GPP’s 5G/NR Release 15 technology. By disclosing its royalty rate early, Ericsson wants to increase transparency and predictability, to promote widespread adoption of the standard once it is released and to maintain a healthy ecosystem for the industry by encouraging future development and the adoption of standardised technology.

JX: Rules for 5G patent licensing must be more predictable, flexible and efficient. Centralising the management of 5G patents will help to achieve greater transparency and predictability in licensing.

Also, 5G patent licensing rules should be subject to economies’ development levels and their technical contributions to different industries. More flexible rules will lead to better operability and higher transaction efficiency.

WP: It has become a consensus in the industry to form global 5G standards. All players involved in 5G from different countries and different industries should have dialogues and negotiations on 5G patent licensing rules.

Q: How do you think FRAND questions will/should develop in the 5G era?

IB: With the ongoing litigation and regulatory attention focused on SEP licensing practices worldwide, Lenovo hopes that a reasonable consensus will develop. Specifically, SEPs should be valued based on rational economic principles, which take into account the value of the technology they cover, including the incremental cost (if any) of an alternative non-infringing substitute. This is the correct focus rather than looking at the value overall of a device that incorporates technology covered by an SEP. Also, the value of standardisation should not be considered. Rather, the technology as a whole should be valued – an approach already taken by some courts – and then each relevant SEP should be considered for the portion that it contributes to that overall value. Such a process will yield much more reasonable economic results. Another FRAND issue that should be resolved is the treatment of worldwide licensing demands in litigation in a single country. Courts that force a licensee to take a worldwide licence or else be excluded from the entire country in which the court sits provide the patent owner with a bargaining power that is completely one-sided. Most such courts also do not take the time to evaluate the strength or scope of the patent owner’s portfolio outside that particular country. While it may be inefficient to require a patent owner to pursue infringement litigation in multiple countries, this is the only way to ensure that patents in each country are fairly examined and subjected to trial before royalties are awarded summarily.

NY: Again, a more transparent, predictable and reasonable royalty for 5G SEPs is crucial to facilitate industry development. To address concerns on royalty stacking, the industry expects a transparent and reasonable maximum aggregate royalty level for 5G SEPs in accordance with industry licensing practices.

FY: FRAND in 5G patent licensing can be used in a more flexible way. A licensing matter could be considered from a business collaboration angle. Licensors shall craft flexible licensing strategies for different licensees rather than following FRAND rigidly. This might include, for example, setting different rates in each region based on the total number as well as proportion ratio. Or setting a maximum rate based on the number of patents held by a rights holder.

HS: As mentioned above, a FRAND licensing system is critical to ensure a fair return on investments in research and standardisation by actors throughout the ecosystem.

In the times of 5G, misconstruing licensing value by focusing excessively on the royalty base or insisting on the same royalties for all verticals has the potential either to dry up investment in standardisation or to prevent some new verticals from arising in the marketplace. To avoid either outcome, we must focus on the value that cellular technology brings to that vertical and differentiate pricing according to that. For example, a use case that requires the strictest performance requirements in the 5G standard will likely enjoy high value from patented 5G connectivity (eg, remote surgery, autonomous vehicles or industrial real-time applications), while uses such as simple sensors may value patented 5G connectivity less. Price differentiation will be key to allow these various use cases to flourish and to encourage the future development of standardised technology.

JX: FRAND is a great heritage, and an important development being recognised by most parties. FRAND principle should be further developed for 5G technologies. There are great differences in understanding of FRAND among patentees with different business models, or at different development stages. An absolute fair FRAND licensing can be theoretical, and it will make the patent licensing process long and inefficient. Thus it might cause delay in achieving the value of some important patents for both society and the rights holders.

From the perspective of consumers, communication is a basic human right and people are entitled to improve their lives by using communication. The FRAND principle should allow people in different regions to have the same right to use advanced communication technologies, as well as allow different rates used for different regions. If 5G technology cannot benefit people at all economic levels, it will fail to change human society.

Similarly, each industry is indispensable for changing society, and each industry has the same right to enjoy the improvement and convenience brought by 5G communication technologies. The FRAND principle for 5G patent licensing should therefore be flexible enough to adapt to industry differences and to promote innovation in all industries, rather than select industries based on royalty rates only.

WP: With respect to FRAND, first there must be fair preconditions for dialogues and negotiations between patentees and licensees on equal terms. Second, relevant patent information must be open and transparent so that it can be fully understood by both parties. Also information shall be available to help judging whether the patent licensing conditions are reasonable. Third, FRAND should also take the regional characteristics of patents, scale of local industries and local development status into account when evaluating the legitimacy and rationality of patent-related behaviours in a region.

If most companies can reach an agreement on 5G patent licensing rules, including the overall value contribution of 5G patents to a product, the royalty base and range, we still need to consider whether these rules are reasonable and FRAND.

Q: What are the biggest opportunities and challenges for your organisation in 5G?

IB: Lenovo, like other PC companies, sees 5G as an opportunity to create PCs that are always on and always connected – similar to today’s smartphones. With more access to higher-speed data, users will have much greater flexibility to compute on the go. In addition, given the extremely high speeds promised by 5G, consumers will have access to high definition and ultra-high definition video content on a consistent and nearly ubiquitous basis. One potential challenge is cost. The promise of 5G can only be realised if the carriers provide large amounts of high-speed data at low cost. If data rates are too high, few consumers will take advantage of the tremendous capabilities of 5G. 5G will also trigger a wave of mobile phone replacements and upgrades as consumers begin to understand the benefits of this huge network speed increase. But again, this can only happen if carriers make this speed available at attractive prices.

FY: For OPPO, we are focusing on the opportunity to accumulate our own IP rights and increase our strength in participating 5G standardisation. As China and the world pay more attention to IP rights, we are confident that our build-up in R&D and IP rights will benefit the company. OPPO now has our own own 5G R&D team, which gives us an opportunity to participate in the 5G standard formulation and accumulate IP rights in this area. It also gives OPPO an opportunity to enhance our brand image and influence in 5G.

HS: Alongside developing the 5G standard, we are considering how these global standards complement a networked society – a world where everything benefits from being connected. The key domains of the 5G system are wider than previous generations, including support for network slicing, wireless and wired access, transport, cloud, applications, management and orchestration. As these structures converge, we are placed in a unique position to lead the development of new standards for all major mobile and fixed communication systems. This creates an innovation platform – that is, a network for all industries and society. We are making every effort to help you turn on 5G.

JX: The current 5G patent work faces various challenges. First, the contradiction between scattered 5G patent licensors and licensees in need of centralised management. Second, potential patent conflicts among different industries. Third, some new entrants and old players in the 5G industry have contrasting positions and perspectives. Fourth, legal conflicts between operating companies and NPEs.

However, there are also opportunities for 5G patent work. It is likely that industrialisation in this area may be faster than ever, so there may be a strong and urgent need to solve patent issues in the industry. In recent years, several major economies around the world have gained experience of the SEP judicial process. Finally, Chinese companies are expected to become more active in the field of 5G patents.

WP: 5G patent work will no longer be restricted to one industry or one region. Effective 5G patent work can promote the formation of reasonable global patent rules, and greatly foster innovation. But we are faced with many challenges.

In particular, 5G patent work must meet the following requirements. First, patent rules should fit actual conditions of different 5G-related industries, which requires negotiations between different sectors. Second, rules should have a consistent consensus globally, which will require negotiations among companies across the world. Third, 5G patent information should be more transparent, timely and accurate, including the disclosure of 5G SEPs, licensing information and other information that is of help in judging if a licence is FRAND.

Action plan

For both 5G technology developers and implementers, 5G patent work is increasingly important. Chinese companies are taking a more active part in 5G patent accumulation, licensing and standardisation work.

In addition to the communications industry, 5G will be integrated with multiple vertical industries, making patent competition and collaboration more complicated.

  • 5G involves a greater number of participants, which provides more options for collaboration but also stimulates more intense competition.
  • Chinese equipment manufacturers and telecommunications carriers hope that 5G patent licensing can be more orderly, transparent and reasonable than that in the 3G and 4G spaces. Device makers also hope to improve their negotiating power, and to prevent a small number of major standard patent owners from setting unreasonable licensing rates.
  • With regard to SEPs and FRAND, some manufacturers are already calling for continuous attention and intervention from regulatory authorities, in the hopes of reaching a reasonable global consensus.
  • It is becoming clear that understandings of FRAND differ greatly – the FRAND principle thus requires further clarification and development.

Bing Zhao is the China editor of IAM, based in Hong Kong