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Huawei to Start Charging Smartphone Makers Royalties for Using Its Patented 5G Tech
Huawei will begin charging smartphone makers a “per unit royalty cap” at $2.50 for smartphones capable of connections to 5G and previous generations of mobile networks. This price is lower than some of Huawei’s competitors including Nokia. Charging royalties on key patents related to cellular technology could help Huawei make up at least part of the revenue hit in other parts of its business, such as smartphones, as a result of U.S. sanctions. In the past, Huawei charged Apple royalties for using their IP.
When a new generation of cellular technology is being developed, so-called global standards need to be created. These are protocols, technical specifications and design that allow interoperability between 5G networks globally and allows smartphones to communicate with these networks. Standards bodies are tasked with creating these. Companies such as Huawei, Nokia, Swedish telecom equipment giant Ericsson, Qualcomm and others contribute to the standards development process. As these companies devise technologies which they then patent. When a smartphone maker wants to release a 5G handset, they’re going to need to use the SEPs of one or more of these companies. In return, these companies can get a royalty fee. Deciding what is and what isn’t an SEP can be tricky and can lead to high profile litigation between two parties. Huawei has 3,007 declared 5G patent families, the highest out of any company in the world, according to analysis by intellectual property research organization GreyB. Patent families are a group of same or similar patents filed in different countries. GreyB estimates that around 18.3% of those Huawei 5G patent families are SEPs that are in use, more than any other company. The other top patent holders are South Korean firms Samsung and LG Electronics, Nokia, Ericsson and Qualcomm.
Huawei’s $2.50 cap on royalties for smartphone makers is on the lower end compared to its rivals. In 2018, Nokia said the licensing rate for its 5G SEP portfolio will be capped at 3 euro ($3.58) per device. Ericsson said it will charge $2.50 to $5 per device. Huawei charges royalties for its 4G patents and estimates it will receive about $1.2 billion to $1.3 billion in revenue from patent licensing between 2019 and 2021. In the past, Huawei has not been very aggressive on royalties or litigation. But that could now change as Huawei has been hit with a number of sanctions by the U.S. which has accused the company of being a national security threat. Huawei has repeatedly denied this claim. Last year, Huawei filed two lawsuits against Verizon alleging the U.S. carrier infringed patents held by the Chinese telecoms giant. (Source: Reuters)
Huawei will begin charging smartphone makers a “per unit royalty cap” at $2.50 for smartphones capable of connections to 5G and previous generations of mobile networks. This price is lower than some of Huawei’s competitors including Nokia. Charging royalties on key patents related to cellular technology could help Huawei make up at least part of the revenue hit in other parts of its business, such as smartphones, as a result of U.S. sanctions. In the past, Huawei charged Apple royalties for using their IP.
When a new generation of cellular technology is being developed, so-called global standards need to be created. These are protocols, technical specifications and design that allow interoperability between 5G networks globally and allows smartphones to communicate with these networks. Standards bodies are tasked with creating these. Companies such as Huawei, Nokia, Swedish telecom equipment giant Ericsson, Qualcomm and others contribute to the standards development process. As these companies devise technologies which they then patent. When a smartphone maker wants to release a 5G handset, they’re going to need to use the SEPs of one or more of these companies. In return, these companies can get a royalty fee. Deciding what is and what isn’t an SEP can be tricky and can lead to high profile litigation between two parties. Huawei has 3,007 declared 5G patent families, the highest out of any company in the world, according to analysis by intellectual property research organization GreyB. Patent families are a group of same or similar patents filed in different countries. GreyB estimates that around 18.3% of those Huawei 5G patent families are SEPs that are in use, more than any other company. The other top patent holders are South Korean firms Samsung and LG Electronics, Nokia, Ericsson and Qualcomm.
Huawei’s $2.50 cap on royalties for smartphone makers is on the lower end compared to its rivals. In 2018, Nokia said the licensing rate for its 5G SEP portfolio will be capped at 3 euro ($3.58) per device. Ericsson said it will charge $2.50 to $5 per device. Huawei charges royalties for its 4G patents and estimates it will receive about $1.2 billion to $1.3 billion in revenue from patent licensing between 2019 and 2021. In the past, Huawei has not been very aggressive on royalties or litigation. But that could now change as Huawei has been hit with a number of sanctions by the U.S. which has accused the company of being a national security threat. Huawei has repeatedly denied this claim. Last year, Huawei filed two lawsuits against Verizon alleging the U.S. carrier infringed patents held by the Chinese telecoms giant. (Source: Reuters)
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