There is an ongoing battle between Huawei and Conversant Wireless Licensing regarding royalties relating to patents. The battle is multi-jurisdictional, from china, UK and Germany. to go through the case effectively, we will define some key matters which should be defined before we proceed;
1.Who is Conversant/What do they do?
Conversant Wireless Licensing S.à r.l. is a subsidiary of Conversant Intellectual Property Management Inc. that is focused on licensing a portfolio of around 900 patents and patent applications covering wireless technologies used in a wide range of mobile communications devices and services. The Conversant Wireless portfolio includes many declared SEPs that Conversant seeks to license on FRAND terms. Conversant Intellectual Property Management Inc. is a global intellectual property management company known for its principled approach to patent licensing. With a portfolio of thousands of patents and patent applications under management, Conversant has special expertise in semiconductors and communications technology.
2. Who is Huawei/ what do they do?
Founded in 1987, Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices based in china. Huawei currently employs around 197,000 employees and operates in over 170 countries and regions, serving more than three billion people around the world.
3. What are Standard essential patents?
Standard Essential Patents are patents which protects technology that has been selected for use in a specific standard. In other words, these are inventions which have been patented and must necessarily be used when implementing a cellular communication standard, therefore these are considered “essential” to that standard and to operate competitively. therefore such patents are regulated and should be made available for use under patent licenses based on a Fair, Reasonable and Non-Discriminatory (FRAND) basis.
4.What is patent invalidation?
If one can prove that the invention was not novel, by either being previously used, previously patented, or previously described in a publication in any country before the patent application then a patent can be invalidated which would imply killing the patent.
5.What is patent infringement?
Direct patent infringement is most common and easier to catch than indirect infringement. Direct patent infringement occurs when a person or entity makes, uses or sells a patented invention without the specific authorization of the patent owner.
6.What are the key elements to prove patent infringement?
Proving patent infringement in court requires a plaintiff to prove two broad elements:
• Ownership and validity of the patent, and
• Infringement of the patent by the defendant
7.What are FRAND requirements?
FRAND requirements means obligations to license or grant non-assertion covenants on either royalty-free or fair, reasonable and non-discriminatory terms pursuant to the policies of a standards setting organization that relate to one or more claims of a Patent that is essential to a standard published.
8.What is FRAND license rate?
Determining FRAND royalty rates in SEP portfolio licensing has become a widely discussed topic in recent years as mobile phone standards have rapidly evolved and an increasing number of handset manufacturers have entered the mobile handset market. The comparable licence approach is mainly used to determine dollar-per-unit or effective percentage FRAND royalty rates.
9. How are license rates determined?
One way to determine accurate and fair license rate is using the comparable Licenses approach, whereby the license rates are determined based on other license agreements of the same patent.
In 2011/2012 Conversant purchased 3 Standard essential patents from Nokia as part of a large patent portfolio acquisition. Within the portfolio ] three CN SEP patents were included (ZL00819208.1, ZL200580038621.8, ZL200680014086.7) and the U.S. Patent No. 6,477,151 (‘151 patent) describes a method in which mobile devices communicate with base stations .Following the acquisition, Conversant contacted Huawei regarding their use of SEPs owned by Conversant relating to 2G, 3G, and 4G and other communication standards. The use by Huawei should be governed by a license agreement. From 2014 to 2017 Conversant and Huawei did not reach an agreement regarding the royalty rates relating to these patents as Conversant claims the rates proposed by Huawei did not meet the FRAND requirement. As the two companies could not reach an agreement amicably they resorted to courts filing cases in three jurisdictions:
Case 1 - UK:
In July 2017 Conversant sued Huawei and all of its UK affiliates in the UK High Court. Conversant sued for patent infringement requesting the English court to assess Huawei’s infringement with regards to four UK patents, and also requested from the court to rule on the global FRAND license rate with regards to its global patent portfolio. English court issued its decision on 26 August 2020 confirming Conversant ability to enforce its UK standard essential patents and approved a FRAND injunction. This rule has been appealed and is currently under process.
Case 2 - China:
In January 2018, in a rebuttal, Huawei initiated a case against Conversant at the Nanjing Intermediate Court. Huawei requested that the court invalidate all patents. The invalidation action thereby claimed non-infringement, and requested a determination of the standard essential patent royalties for families which Cognizant’s Chinese patents were part of. The Nanjing intermediate court issued a decision to invalidate all three of the Chinese patents. The decision was immediately appealed by Conversant and is currently at the court of appeals.
Case 3 – Germany:
In April 2018, in order to counteract Huawei’s lawsuit in China Conversant filed a patent infringement lawsuit at the court of Düsseldorf, Germany, requesting an order for Huawei to stop the infringement and compensate for losses. Düsseldorf Regional Court has now prohibited the two companies from selling UMTS-enabled devices in Germany.
Anti-anti-suit injunctions between a German and a foreign court first happened between Nokia and Daimler, its co-litigant Continental. The Regional and the Higher Regional Courts of Munich declared it to be incompatible with German law. The Supreme Court of China has prohibited Conversant from enforcing the rulings against Huawei, so these cases may extend for a longer period of time.
• https://image.slidesharecdn.com/patentinfringement-140511003558-phpapp02/95/what-is-patent-infringement-how-to-avoid-it-3-638.jpg?cb=1399768663 [ what is patent infringement ?
• https://patentbusinesslawyer.com/wp-content/uploads/2020/12/Patent-Infringement-in-India.png [ Patent Infringement]
• https://www.google.com/url?sa=i&url=https%3A%2F%2Flogos-world.net%2Fhuawei-logo%2F&psig=AOvVaw0DhE302OcIyqPU0vB6ubg8&ust=1630258777394000&source=images&cd=vfe&ved=0CAsQjRxqFwoTCLC8gbGh1PICFQAAAAAdAAAAABAJ [Huawei]
• https://fixthecourt.com/wp-content/uploads/2019/08/judge-generic.jpeg [ judge]
• https://www.savant-events.com/wp-content/uploads/2019/12/conversant.png [ conversant ]