Huawei has entered into a multi-year patent cross-licensing agreement with Ericsson for 5G networks and other technologies as the Chinese group looks for ways to generate revenue after being banned from using telecoms networks or imposed restrictions in many countries.
Huawei announced on Friday that rival equipment makers will be able to access each other’s patents needed for “3G, 4G and 5G mobile technologies” used in network infrastructure and consumer devices.
Huawei said, without elaborating, that Huawei and the Swedish company already have a patent license, but this is the first long-term agreement between the two companies.
Patent development and monetization is a way for Huawei to make up for lost sales and seek growth after pressure from Western sanctions.
The US banned companies exporting to Huawei without a license in 2019, cutting off the Chinese company’s connection to critical semiconductors it needs for smartphones, significantly reducing its consumer electronics market share. Washington sees Huawei as helping the Chinese government in cyber espionage and technology theft, and restrictions have since increased. Huawei denies such allegations.
In Europe, the United Kingdom, Denmark, Sweden, Estonia, Latvia and Lithuania have banned Huawei from building its own 5G network. The EU is also considering a mandatory ban on member states using Huawei on their 5G networks.
Growing the license fee business is “Huawei’s lifeline in terms of maximizing potential opportunities and long-term certainty,” said BB Foresight analyst Paolo Pescatore. “Huawei is in a precarious position given the negative sentiment towards the company, driven primarily by geopolitical concerns.”
Huawei is the largest holder of 5G patents in the world with 20 percent of global patents.
And in 2021, the company began charging smartphone manufacturers for the use of proprietary 5G technology and other technologies. And last month, the company revealed that maximum royalty rates for 5G devices are $2.50 per unit, which legal experts say is well below the industry average.
Huawei’s licensing revenue was $560 million last year, meaning it generated more patent revenue than it paid other companies in fees for using its patents for the second year in a row.
“The patent owner should receive reasonable compensation from the industry that implements the patent … but executors also have the right to purchase and share technology by paying a reasonable royalty,” said Emil Zhang, Huawei’s head of intellectual property rights in Europe.
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The recent aggressiveness in patent monetization “signals a significant change in Huawei’s strategy, as it used to be the main enforcer.” [of patents of others] “For a long time,” said Benjamin Grzymek, a partner at patent specialist Fieldfisher.
However, he noted that it is standard business practice for major players in standard patent development to enter into cross-licensing agreements to “make peace.”
Huawei is among the players shaping global standards for 5G and other networks, along with Ericsson, Finland’s Nokia and US chipmaker Qualcomm, thanks to its collective dominance in holding so-called standard-setting patents.
2023-08-25 20:14:40
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