OPPO's overseas sales are affected, and Nokia is also embroiled in litigation. Nokia and OPPO have been involved in patent licensing disputes since 2021. Recently, the Chongqing No. 1 Intermediate People's Court issued a first-instance judgment on the relevant case. "OPPO is willing to abide by and implement the global FRAND licensing fee for Nokia's patents determined by the court's judgment, and hopes to actively resolve the patent licensing fee dispute with Nokia. We hope that Nokia can abide by and implement the Chongqing Court's global fee ruling." OPPO's official website stated in a statement.
Documents related to the above judgment have not yet been made public. According to a reporter from China Business News, in addition to Chongqing, OPPO and Nokia have related lawsuits in Germany, the United Kingdom, France, India, Indonesia and other places, and each party has its own victory or defeat. Affected by the lawsuit, OPPO had previously reported that it would withdraw from Germany and the United Kingdom. Vivo is also involved in a patent dispute with Nokia. Vivo products were removed from the German official website in the middle of this year.
In 2021, Nokia and OPPO failed to reach an agreement on a new 5G patent license agreement. Since July of that year, the two parties have been involved in patent disputes in many places around the world. Nokia has previously sued OPPO in more than 10 countries around the world, including the United Kingdom, the Netherlands, France, Sweden, and Finland, with a total of more than 100 cases. OPPO has also initiated litigation in Chongqing Court.
Patent fees are a major focus of dispute between the two parties. Nokia previously stated that the company was negotiating with OPPO to renew the patent license agreement, but a fair and reasonable offer was rejected. OPPO said that the license fee proposed by Nokia is extremely unreasonable.
Related to patent fees, Nokia and OPPO have been "fighting" for a long time. In 2021, OPPO filed a lawsuit in Chongqing related to Nokia's global licensing fees. Nokia raised a jurisdiction objection, which was rejected by the Chongqing No. 1 Intermediate People's Court's first-instance jurisdiction ruling. Subsequently, Nokia appealed, and in 2022, the Intellectual Property Court of the Supreme People's Court made a final jurisdictional ruling, rejecting Nokia's appeal request and upholding the first-instance ruling made by the Chongqing No. 1 Intermediate People's Court. The recent first-instance judgment of the Chongqing No. 1 Intermediate People's Court is the first FRAND global rate judgment in the patent dispute between OPPO and Nokia.
Since this year, litigation between Nokia and OPPO continues in many places around the world, with each party having its own victory or defeat. OPPO has achieved favorable results in some areas. In January, the District Court of The Hague, Netherlands rejected Nokia's application for a temporary injunction against OPPO. In July, the relevant French court ruled that Nokia's EP1704731 and EP1702486 patents lacked inventive steps, and Nokia's related lawsuits would be withdrawn. The two parties' two-year patent litigation in France came to an end. In September, OPPO won the case in the Swedish court, and the Swedish court ruled that Nokia's two standard essential patents were invalid.
In Brazil, Germany and India, Nokia achieved favorable results. Because related products may infringe on Nokia's relevant standard essential patents, a local court in Brazil issued a preliminary injunction against OPPO in February; in Germany, after the Munich District Court ruled that OPPO infringed on Nokia's patents last year, the German court dismissed OPPO's patent lawsuit against Nokia this year; Nokia had previously filed a lawsuit against Nokia in Delhi, India. The High Court filed a lawsuit against OPPO, requesting the court to issue an injunction to prevent OPPO from selling infringing products in India. OPPO denied the infringement and raised defenses regarding the validity and necessity of the patents involved. However, in November, the Delhi High Court in India rejected OPPO's objection and allowed Nokia's lawsuit to continue.
The patent litigation between the two parties has affected OPPO’s overseas layout. According to data from market research firm Counterpoint, OPPO's shipments in Europe fell by more than 50% in the second quarter of this year. An OPPO insider told reporters that in addition to Germany, OPPO's sales in Western European countries such as the United Kingdom may also be affected by the lawsuit. The United Kingdom, France, and Germany in Western Europe have relatively large short-term legal risks, and it is relatively difficult to break through local operator channels. The company may make strategic adjustments.
Gao Shiwang, director and spokesman of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, told China Business News that patent litigation has posed certain obstacles to domestic mobile phone exports. Some patented manufacturers are less competitive in the mobile phone market, but they have a history of patented research and development. Domestic mobile phone manufacturers have made a lot of innovations in new technologies, but they still have to face some standard essential patents that charge relatively high fees. In addition, there are lawsuits initiated by disembodied entities in overseas markets for the purpose of charging fees. Mobile phone manufacturers need to evaluate such potential costs when going overseas.
In addition to OPPO, vivo is also involved in a patent dispute with Nokia. In April this year, the Mannheim District Court in Germany ruled that vivo infringed on Nokia's relevant patents. Subsequently, vivo's official German website issued an announcement to suspend the sale of products in the German market. In July, vivo also suspended sales and services in the Netherlands.
Nokia has invested in communications technology for many years. According to the 5G patent charging standard announced by Nokia in 2018, the charging standard for each unit is 3 euros. Compared with other major manufacturers, Ericsson's patent fee standard for 5G multi-mode mobile phones is adjusted according to the selling price of the mobile phone, and the patent fee is between US$2.5 and US$5 per unit; Qualcomm's standard is 2.275% and 3.25% of the selling price of 5G single-mode and multi-mode mobile phones; Huawei's patent fee standard for 5G and 4G mobile phones is no more than US$2.50 and US$1.5 per unit.
Mobile phone manufacturers such as OPPO are also investing in 5G technology research and development. OPPO's above statement stated that as of the end of September this year, OPPO had laid out 5G communication standard patents in more than 40 countries and regions and completed 5,700+ global patent applications. According to the "Research Report on Global 5G Standard Essential Patents and Standard Proposals (2023)" of the China Academy of Information and Communications Technology, among the industrial entities that declare 5G standard essential patents by ETSI (European Telecommunications Standards Institute), the top five patent families are Huawei, Qualcomm, Samsung, ZTE, and LG, with Nokia ranking sixth and OPPO ranking ninth.
For mobile phone manufacturers such as Huawei and Xiaomi, collecting patent license fees is not the only way. These manufacturers also sign patent cross-licensing agreements with other manufacturers. Nokia is no longer a mainstream mobile phone manufacturer. Its technology business is mainly engaged in patent licensing. In 2022, this business revenue will be 1.595 billion euros, accounting for 6.4% of Nokia's overall revenue, with a profit margin of 99.7%.
At present, patent disputes related to mobile phones have attracted widespread attention. Not only does OPPO hope to resolve the dispute, but in March this year, Jenni Lukander, president of Nokia’s technology business, also expressed in an interview with the media that she hopes to resolve the years-long patent dispute with OPPO and other Chinese mobile phone manufacturers as soon as possible. For Nokia, litigation is always the last resort.
In Europe, where patent disputes occur frequently, the EU also intends to improve relevant regulations. In April this year, the European Commission planned to supplement patent-related provisions. The EU stated in relevant explanations that holders of standard essential patents (SEPs) commit to licensing patents on fair, reasonable and non-discriminatory (FRAND) terms. But for years, the current system lacked transparency, predictability and faced lengthy litigation. The EU's proposed SEP licensing framework hopes to ensure that end-users have access to products based on the latest standardized technologies at fair and reasonable prices, and to allow parties to agree on the FRAND terms of the license in a more efficient way.