Welcome to the WeChat subscription number of "Sina Technology": techsina
Text/Wang Xiaolou
Source/Ginkgo Technology (ID: yinxingcj)
The Spring Festival, a supposedly leisurely holiday, is an extremely dangerous time for Chinese technology companies.
Patent hunters who have been secretly waiting for a long time will deliver a fatal blow to Chinese companies. This has been tried and tested.
In February 2017, just after the Spring Festival, Kang Wensen suddenly sent a letter to Huawei in the form of a unilateral statement open letter, asking Huawei to obtain its global patent packaging license.
Internationally, companies like Convinson that have almost no physical business and survive mainly by launching patent infringement lawsuits are everywhere, and the industry has also given them very vivid nicknames: patent trolls, patent cockroaches, and patent sharks.
In 2018, Xiaomi Lei Jun was invited to the United States on the fourth day of the Lunar New Year in 2019 because of four patent infringement lawsuits filed by Dareltech.
During the Spring Festival holiday in 2020, Sharp also launched a patent infringement lawsuit against OPPO.
Feng Ying, senior director of OPPO's intellectual property department, was very surprised when he heard the news. Because OPPO was already negotiating with Sharp a few months ago, according to the general patent negotiation process, the two companies will conduct full consultations first.
Around technology and price, some companies may not even sue for five or six years. After all, if a reasonable fee can be negotiated, both parties can benefit from it.
Sharp has a glorious history of nearly a hundred years in the manufacturing industry.
In the ranking of 4G LTE patented technologies, it still ranks among the top ten in the world. Just suing OPPO for some of the "standard essential patents" walls is enough to make the industry daunting.
After overturning the negotiating table, Sharp immediately began to ask OPPO to pay a high patent fee: about $1 per mobile phone. According to the sales volume of OPPO at the time, it would have to pay 150-200 million US dollars in patent fees a year.
Complying with Sharp's two options: compromise and tough challenge, for OPPO, no matter how you choose, it is very headache and difficult.
Smartphone profits are meager, and choosing to comply with Sharp’s requirements means that the royalties that OPPO has to pay may not be able to be earned back in ten years. It is higher than compliance and compromise, and it will definitely become the standard for Sharp to negotiate with other domestic mobile phone manufacturers.
After Huawei's mobile phone business was withdrawn, OPPO was fortunately and helplessly pushed to the forefront, which made many domestic intellectual property lawyers sweat for it.
This can't help but remind many people of the bitter past when China's DVD industry collapsed many years ago.
The tragedy of the DVD industry
Zhen Wenxian is an engineer engaged in VCD and DVD software development earlier in China.
He entered Aido in 1995, participated in the development of the first VCD, entered BBK in 1998, and then personally experienced the DVD industry disaster.
Zhen Wenxian still has lingering fears when he thinks of it, and the thing that saddens him the most is that this industrial "disaster" could have been avoided at the source, because no one paid attention to it at the time.
" Physically, the patents are owned by them (foreign-funded enterprises), but the inventor of the code is actually a Chinese, and it was invented by Wanyan Company. "
The Wanyan Company mentioned by Zhen Wenxian was founded in 1993 by Jiang Wanmeng and "the father of MPEG" Sun Yansheng, and developed and produced the world's first VCD player in that year.
However, the two founders did not apply for this patent, which also led to the first batch of 1,000 VCD machines produced by Wanyan Company being sold out, becoming the early anatomical objects of domestic and foreign home appliance companies.
Soon after, Wanyan Company disclosed the VCD production technology and decoding chip. Some foreign companies quickly mastered the two core technologies of decoding chip and movement (optical disk reading and driving system), and carried out technical upgrades.
Including the laser disc technology adopted by foreign companies on DVD later, it is based on the MPEG-2 standard formulated by Wanyan Company in 1994 and evolved.
Although we cannot simply define the MPEG-2 standard as a simple upgrade of MPEG-1, this standard is actually formulated by China, and the patent right no longer belongs to Wanyan Company.
A general international law of patent rights is that whoever applies for the patent right first will belong to him.
In 2001, China's DVD exports accounted for 70% of the world's total output.
The "6C Alliance" composed of several giants Hitachi, Panasonic, JVC, Mitsubishi, Toshiba, and Time Warner, as well as the "3C Alliance" composed of Sony, Pioneer, and Philips, began to charge patent fees to China. The DVD industry has launched an "offensive".
At the beginning, the 6C Alliance required that Chinese companies pay a patent royalty fee of US$4 to the 6C Alliance for each DVD player exported, and then the 3C Alliance also pulled the trigger. So the negotiating conditions became: Chinese companies need to pay $5 in royalties for every DVD player they export.
The 6C Alliance has published patents since 1997, and since 1999 it has sent letters to companies to inform them to pay patent fees.
In the more than a year of patent negotiation with China's DVD, the 6C Alliance has been reluctant, but suddenly the global DVD market demand reached 40 million units, and China's manufacturing accounted for 90% of the 2002 offensive.
It's like a game of releasing water and raising fish.
Foreign companies have already had professional preventive strategies for patent protection, and they are always watching every move of the industry. If there is no oil and water, it will not bother you, and even if there is "offensive", it is to turn a blind eye.
Wait until the fish is fattened before fishing. This is the usual tactic of patent offense and defense. TD-SCDMA, set-top box and MP3CEBIT case and LG sued TCL in the United States for infringing its digital TV patents, etc. This is the case.
According to a survey by the Ministry of Commerce, in 2002 alone, 71% of my country's export enterprises encountered foreign technical barriers to trade, 39% of export products were affected, and the final economic loss reached 17 billion US dollars.
At that time, the overseas business alliances that initiated lawsuits against the DVD industry were called the "Eight-Power Allied Forces" by the media.
The "Eight-Power Allied Forces" attacked right around the Spring Festival in 2002. In January and February of that year, thousands of DVDs were successively detained at customs.
The Chinese DVD companies, which are powerless to fight back, have no bargaining power to deal with, and can only obey all negotiating conditions.
In 2004, Thomson Corporation and DTS Corporation, both members of the DVD Forum, launched a new round of patent litigation. After successive routs, foreign DVDs still exist, and the domestic DVD industry is already struggling.
By 2005, my country's DVD production still accounted for more than 90% of the global total. On the other hand, DVD makers continue to merge and shut down, dropping sharply from 400 to 150.
In this way, China's DVD industry has gradually become an overseas foundry.
In Zhen Wenxian's view, China's DVD started early, and Wanyan Company, as the industry leader, as long as they pay attention to patented technology, in the "encirclement and suppression", they will not be able to come up with decent and equal bargaining chips in the end. .
" Patented technology is like a strategic nuclear weapon. For companies, you can choose not to use it, but you must have it, or you won't even have the option to be beaten. "
Just as the atomic bomb has not been used once since World War II, it can contain all forces in the game of great powers and keep the world in a delicate balance.
Tragedy never stops
The DVD industry has a bitter past. Looking back at the process of China's reform and opening up, it can be seen as crossing the river by feeling the stones.
In July 1978, in a report approved by the Ministry of Foreign Affairs, the Ministry of Foreign Trade and the Ministry of Foreign Economic Relations, the CPC Central Committee clearly stated for the first time that "my country should establish a patent system".
Until 1984, the Fourth Session of the Sixth National People's Congress deliberated and passed the "Patent Law". At that time, nearly two hundred years had passed since the first patent law was enacted in the United States.
China had just broken away from the planned economy at that time, short-sightedness and impetuousness were still prevalent, and the number of patent applications was not about the quality. ".
At the enterprise level, no matter how much forward thinking you have, it is not worth the boss's sentence "What's the use of applying for this patent?"
The gap with Western countries can be seen in the words of Disney spokesman Irving Okun in 1989: "We are always litigating."
The fact that cannot be ignored behind this sentence is that Western companies have long incorporated the intellectual property rights protection system into their normalized management.
There is even a joke circulating in the market: If one day you are trapped on an island, the best way to be rescued is to draw a Mickey Mouse on the island, and Disney's legal affairs will come to sue you as quickly as possible.
It is impossible for China to live on an isolated island. It is the right way to integrate into the process of globalization and to be familiar with the rules and participate in the game. In 1992, along with the resumption negotiations, my country made the first revision to the Patent Law.
In the annual academic journal "Patent Law Research" of the Institute of Patent Law of the China Patent Office, an article entitled "About the Revision of the Patent Law of the People's Republic of China" records:
"The patent law has played an important role in promoting China's scientific, technological and economic development in the past seven years . Practice has proved that the formulation of the patent law is correct. In order to better promote foreign economic and technological exchanges, encourage inventions and creations, and make China's patent protection level further improved to the international level As the standards come closer, it is necessary to amend the patent law. ”
Unfortunately, China and Chinese enterprises do not have much time to digest the "exotic product" of intellectual property.
WTO's accession rules and global economic integration have strengthened international trade ties, allowing Chinese enterprises to gain a broader market space. However, the change in competition rules has made many Chinese companies have no time to deal with them, and they have already collapsed.
To a certain extent, the annihilation of the DVD industry is the two sides of Chinese enterprises ' " moving closer to international standards " : they must always be prepared to suffer the worst beatings, and they must also strive to embrace and say the most beautiful love words.
The tragic story of the DVD industry has not stopped. HTC, which has made countless people feel sorry, is also a giant that fell due to patents.
In 2011, Apple took HTC to court for patent infringement, demanding a ban on the sale of 29 HTC phones in the United States.
At that time, HTC was booming in North America, and the founder Wang Xuehong even said, "If there are only two mobile phone manufacturers in the future, then HTC will definitely be one of them."
This is not arrogant, because at its most brilliant, even Apple publicly admitted: HTC is the No. 1 competitor.
However, due to HTC's "streaking" on the patent, its vitality was greatly injured in the confrontation with Apple. In the end, Apple won the case. HTC took nearly a year to settle with Apple.
Subsequently, the story of the "Eight-Power Allied Forces" was staged again.
BlackBerry, Samsung, Nokia, and Microsoft have also followed Apple's lead in launching patent lawsuits to carry out a global "encirclement and suppression" of HTC. Repeated patent disputes and successive bans have led to a shrinking global market for HTC.
Today, almost no one remembers that it was the sales champion that was on a par with Apple in the American market.
Awakening from the hunt
In recent years, almost all overseas companies have encountered patent "encirclement and suppression", and the mobile phone industry is the first to bear the brunt.
In 2013, Xiaomi's first overseas battle was against Blue Spike, known as a patent troll; in 2014, Xiaomi was sued by Ericsson for patent infringement in India and was banned from sales.
In 2016, a patent lawsuit was launched between Meizu and Qualcomm. In the face of high patent fees, Meizu once made a high-profile claim and played the "sorrow card".
In the face of the hard "patent wall", not only the Internet thinking is vulnerable, but even Huawei, which has self-developed Kirin chips, cannot bypass it.
But no matter how strong Qualcomm is, mobile phone manufacturers have to pay patent fees before finding an alternative.
Chinese mobile phone companies that lack the ability to deal with patent risks seem to be climbing on the steepest cliff: Huawei, ZTE, Lenovo, Xiaomi, Meizu... These familiar brands have been involved in multinational patent lawsuits one after another.
Why is the patent war focused on the mobile phone industry?
The mobile phone industry is in a trend of the times, and it is the culmination of various hard-core new technologies. A smartphone has more than 400,000 patented technologies, and no mobile phone manufacturer can do it all.
The huge market demand and quantifiable patents will inevitably bring about an endless game between mobile phone manufacturers, mobile phone manufacturers and other companies with patented technology, which will never stop.
It is also the brutal and bloody patent wars that have awakened countless companies and entrepreneurs. They have been learning through hugs, growing through forbearance, and growing through development, waiting for the opportunity and fighting back.
By 2021, China has become a true patent power, ranking among the top five in the world in terms of patent applications. However, the quality of patents is not high, and it is still a flaw in patent infringement protection.
More than 80% of the number of patents in my country are completed by patent agencies. Many companies apply for patents for the purpose of listing. Impetuous and short-sighted are also promoted. These agencies ignore the quality of patent applications.
In foreign countries, patent authorization is the beginning of patent work; in China, patent authorization is often the end of patent work.
It has to be admitted that the intellectual property rights of a large number of products in the world today are in the United States.
Ren Zhengfei once said in public that the depth and breadth of American science and technology is worth learning. Although Chinese companies, including Huawei, are leading in certain fields, there is still a big gap between China and the United States.
In the final analysis, the core of the patent war lies in the patented technology itself. If there is no excellent technology, everything will be in vain.
Ren Zhengfei is one of the few entrepreneurs in China who has always kept a clear head. Huawei's status today is inseparable from his foresight.
"Huawei's Winter" has become a swan song. When the "spare tire" plan of HiSilicon was the most enthusiastic, he even poured cold water on it. "The most important thing for us is to be calm and composed. In the end, it is useless if we can't win the battle." .
Ren Zhengfei believes that the spirit of innovation is worth encouraging, but not blindly, we must stand on the basis of human civilization, or stand on the shoulders of our predecessors.
Huawei's HiSilicon "spare tire" plan, which is familiar to the outside world, did not start innovation from the source, and also paid a lot of intellectual property fees to others, some signed a cross-licensing agreement, and some were permanently authorized.
Therefore, we must eliminate a cognitive misunderstanding: patent rights are not monopolies, and most patent wars themselves are not the category of malicious competition. Instead, it protects and encourages innovation in a relatively fair way, and promotes the progress and development of science and technology in the world.
Just like the 5G-related standards that make Americans terrified, it originated from a mathematics paper by a Turkish professor more than ten years ago. Two months after the paper was published, Huawei invested thousands of people and began to study various types of papers centered on the paper. patent.
Although Turkish professor Arikan is not an employee of Huawei, Huawei has provided a lot of funds to support the professor's laboratory so that he can recruit more R&D personnel.
After more than ten years, Huawei's 5G basic patents have ranked first in the world. In the 5G patent battle that has been noisy in the past two years, Huawei has never been left behind.
However, this does not mean that the more patented technologies you have, the more you can win. There is an old saying in the industry, "there are no invalid patents", which often determines the outcome of the patent war.
First SEP anti-suit injunction ruling
"Void" is a technical term in the intellectual property community.
The specific method is to find evidence of prior disclosure of patented technical solutions from a large number of public documents such as patent documents, question the originality of the patent of the complainant, and shake the basis on which it initiates an infringement lawsuit.
A few years before the lawsuit against Huawei, Convinson bought some of the standard essential patents, or SEP (Standard Essential Patent), from Nokia. It is of great value as a strategic reserve asset. Once owned by a company, it is equivalent to "owning a mine at home".
In the past 10 years, the average transaction price of a real and stable SEP patent family is often between hundreds of thousands and millions of dollars.
In the field of communications, each terminal product has tens of thousands of patented technologies, and the SEP license fee has become an "entry ticket" that communications companies cannot avoid.
But in the context of "technological lock-in", SEP is also a high wall: it can decide whether to allow others to use patents, and it can also decide whether others can enter related technical fields and markets.
How is the SEP rate charged? How much do you charge? Previously, China was not a case-law country. Facing the long-arm jurisdiction overseas, it often had to respond passively.
Around the licensing rate, Huawei and Convinson have actually negotiated for many years, but the negotiation is only the first step in the regular process. Convinson still sued Huawei in the UK and Germany.
At that time, the Chinese licensing rate proposed by Convinson to Huawei was more than ten times higher than that awarded by the Nanjing Intellectual Property Court.
During the 3-4 years of communication with Convinson, 8 Chinese patents were "invalidated" by Huawei for the patent license fees of 11 patent families with CN patents, and then Huawei launched a counter-action lawsuit.
Under Huawei's application, in August 2020, China's Supreme Court ruled that Convinson must not apply for the enforcement of the first-instance judgment to stop infringement made by Dusseldorf, Germany, before the Supreme Court issued a final judgment.
This is the first SEP anti- suit injunction ruling made by China, and it was selected as one of the " Top Ten Cases of the People's Court in 2020 " . Previously, China had not introduced an anti-suit injunction system and had no countermeasures against anti-suit injunctions.
In the face of such an international patent dispute, as long as a foreign court issues an anti-suit injunction, Chinese companies will immediately lose judicial protection and can only choose to withdraw their lawsuit or settle in private.
Chinese technology companies are used to the experience of being passively brought to the negotiating table.
Today, Chinese courts have also begun to use anti-suit injunctions, which will undoubtedly bring guiding significance to Chinese courts that deal with such international litigation in the future.
The final ruling in the Huawei-Convinson case provides a very important reference value for the subsequent patent tug-of-war between OPPO and Sharp.
After Huawei, OPPO fights back
Wu Qingyuan, a master of Go, once talked about a famous "Go theory": You surround your territory, I surround my territory, without any fighting, and in the end you will stand tall.
OPPO founder Chen Mingyong likes Wu Qingyuan's words very much. More importantly, as a former practitioner in the DVD industry, he has personally seen an industry collapse due to intellectual property rights.
He understands that if it cannot invest more in patent layout and research and development, OPPO will sooner or later make a "wedding dress" for others and lose its foundation.
In 2014, OPPO, which was rapidly expanding in overseas markets, introduced a person in charge of intellectual property rights, Feng Ying, mentioned above.
Feng Ying has rich professional experience. Huawei used to be his old employer. During his tenure at Huawei, he participated in various patent wars, and also likes to apply the "go mind method" to the battlefield of intellectual property litigation.
After Huawei's mobile phone business was no longer the focus, he could clearly feel that the patent firepower was concentrated on OPPO. In the first quarter of 2022, he and his team are working on hundreds of patent cases, including more than 40 cases for the Nokia family.
Global intellectual property litigation involves multiple dimensions. In his view, winning is not foreseeable from the beginning. It requires hard training of internal skills, coordinating the overall situation step by step, and creating chemical reactions in a chain-like layout to check and balance the opponent.
After Sharp initiated the lawsuit, OPPO quickly made a decision after weighing it several times: it can't just compromise and let others be slaughtered, and the best way is to talk while fighting.
On the patent battlefield, Sharp has always been powerful.
Those who are familiar with the construction of my country's panel production lines may remember that its two "spoilers" in Shenzhen and Shanghai around 2007 delayed the construction of my country's high-generation display panel production lines for 2-3 years.
Especially after being acquired by Foxconn's parent company, Hon Hai Group, Sharp's terminal products have decreased, and large-scale foreign patent lawsuits have gradually increased.
Sharp sued OPPO for some of its patented technologies, which have already made great achievements before, including the LTE communication standard patent that has been licensed with the Mercedes-Benz parent company Daimler Group.
Foxconn's IP chief Zhou Yanpeng even said in the media that mainland companies "will not be convinced if they don't fight."
According to Song Xiantao, a lawyer from Gancheng Law Firm, Sharp took out the "nuclear weapon" of standard essential patents at the very beginning, intending to quickly resolve the battle.
When Sharp sued OPPO in Munich, Germany, the Shenzhen Intermediate Court also issued an anti-suit injunction on the application of OPPO. However, only 7 hours after the anti-suit order was issued, the Munich First Court issued an "anti-anti-suit order", ordering OPPO to apply for the withdrawal of the Shenzhen Intermediate Court's anti-suit order.
However, the Shenzhen Intermediate Court did not pass the preservation ruling and asked Sharp to withdraw the "anti-anti-suit injunction", but initiated the world's first "anti-anti-anti-suit injunction".
One ban, one anti, one anti-reverse... This time and again, it's like a pinball game of "rebound + rebound invalid + rebound again...". OPPO and Sharp have "infinite dolls" on the European battlefield. In Tokyo, Japan and Taiwan, China, OPPO also launched a counterclaim against Sharp.
At the end of 2020, less than a year after Sharp initiated the lawsuit, the Shenzhen Intermediate Court made a jurisdictional objection ruling in the OPPO v. Sharp case, confirming that the Chinese court has jurisdiction over the global licensing rates for standard essential patents.
This is the first time a domestic court has confirmed the jurisdiction of a Chinese court over the global licensing rate for standard essential patents in the form of a written ruling.
At this time, Sharp's decline in the main battlefield has already appeared. If the global license rate continues to be judged lower, the global charging standard will also be reduced, which will be a huge loss.
So Sharp appealed to the Supreme Court.
In the field of international intellectual property, the term "global royalty rate" holds a pivotal position. On the one hand, it represents jurisdiction, and on the other hand, it is related to the country's own economic strength.
In the previous cross-border patent game, the initiative to formulate international standards has always been dominated by developed countries. Only in the past two years has a new topic evolved in China's intellectual property community: global licensing rates.
Now, China has begun to take the initiative to counter the long-arm jurisdiction of overseas courts.
The latest revision to China's Patent Law in 2021 means that China will participate more deeply in the formulation of global intellectual property governance rules.
For Sharp, the initiator of this dispute, being sentenced to a "global license rate" means that in theory, any country and region in the world should be charged at a flat rate, and Sharp's request for an excessively high patent fee , will certainly not be supported by Chinese courts.
Eight months later, Sharp's appeal to the Supreme Court was ultimately dismissed.
At this point, the situation has completely reversed. Good news from all over the world spread to OPPO headquarters one after another. During the one-year and nine-month patent dispute between the two parties, OPPO invalidated dozens of Sharp patents and Chinese patent families.
OPPO found that Sharp's mobile phones in Japan used OPPO's fast charging technology, so they countersued and attacked Sharp's two most important cities, Japan and Taiwan.
After all, peace is made by fighting. According to industry insiders, Ginkgo Technology has reached a settlement between Sharp and OPPO.
The future is no longer scary
The past is not as good as smoke.
Throughout the years of patent wars, Chinese companies have gone from being passively beaten to relying on others, from active participation to setting standards, and then to the ever-increasing right to speak in patents.
Inspirational stories of life and death are constantly opening and ending alternately. Although too many people have moved away from the center stage, the golden horses belonging to the patent war will continue to write, and history will not forget them.
As more and more patent wars are written into textbooks, Chinese companies such as Huawei and OPPO have chosen to pick up "guns" while expanding their patent "arsenals".
According to the latest "Global 5G Patent Activity Report (2022)" released by the China Academy of Communications, as of December 31, 2021, there were more than 64,900 5G standard-essential patents declared globally, and more than 46,100 valid global patent families.
The top ten companies in terms of the number of valid global patent families are Huawei, Qualcomm, Samsung, LG, ZTE, Nokia, Ericsson, Datang, OPPO and Sharp. Huawei's number of valid global patent families accounted for 14%, ranking first with a large advantage.
Today, OPPO's global patent applications have reached 77,000, and there are about 38,000 authorized patents. 5G patents are ranked ninth in the world. OPPO and Apple are also promoting the construction of the next-generation video patent pool to form a "patent alliance".
This also means that OPPO has begun to think about "patent realization" and put it into practice. At present, its strategy seems to be relatively conservative. There is no "point-to-point" lion's big opening, but it is divided into the patent pool.
OPPO's fast charging technology has charged more than 40 companies with patent fees, and OPPO has also achieved good results in the key areas of imaging, AI, antennas and folding screens (Find N).
However, the smoke of the Sharp battlefield has just dissipated, and OPPO was pulled to another new battlefield by Nokia.
In 2021, Nokia launched a lawsuit with an update agreement on cellular standard-essential patents, using OPPO as a breakthrough, demanding high patent fees from the entire mobile phone industry, including 3G, 4G and 5G.
From the perspective of the mobile phone industry, this approach is somewhat "lion's mouth".
In this wave of patent lawsuits by Nokia, Xiaomi is also impressively listed. Vivo filed counterclaims against Nokia in some places.
According to reliable sources, Xiaomi has compromised and submitted the nomination. OPPO submitted an IPR for reexamination of Nokia's US10,701,588 patent to the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) in March this year, challenging the validity of the patent with actions.
Twenty years after China 's accession to the WTO, the DVD industry tragedy has long been buried in the pile of old papers, and the patent wars are still vivid in my mind.
But don't hold grudges for it. The law of the jungle always pushes commercial civilization forward steadily. There is a classic line in the movie "The Godfather": Don't hate your enemy, it will affect your judgment.
Only by respecting our opponents and continuing to invest in technological research and development will we not be afraid of the future.
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