Recently, the Chongqing No. 1 Intermediate People's Court made a first-instance judgment in the case of OPPO v. Nokia over standard essential patent royalties, confirming the global fair, reasonable and non-discriminatory (FRAND) licensing rate for Nokia's 2G, 3G, 4G and 5G standard essential patent portfolios. This judgment is the first global royalty rate judgment for standard essential patents made by my country’s judicial authorities.
On December 14, the above-mentioned first-instance judgment document was officially made public. In the above-mentioned judgment document, the Chongqing No. 1 Intermediate People's Court determined that the global cumulative rate for the 5G standard in the mobile phone industry is 4.341%-5.273%. This is the first cumulative rate for the 5G standard determined globally. In addition, the court ruled on the licensing fees for Nokia’s 2G-5G patent package based on different regions. Among them, the single license fee for 5G multi-mode mobile phones in the first region of the world is US$1.151/unit, and the single license fee in the second and third regions including China is US$0.707/unit. For 4G multi-mode mobile phones, the single-unit license fee in the first region is US$0.777/unit, and the single-unit license fee in the second and third regions including China is US$0.477/unit.
In the past few years, as mobile phone manufacturers have expanded their market share, disputes have continued between mobile phone manufacturers and communication standard essential (SEP) patent holders such as Nokia. Communication manufacturers such as Nokia, Qualcomm, and Sharp hope to gain profits from patent licensing, while mobile phone manufacturers such as Apple, Huawei, Xiaomi, OPPO, and vivo have questioned the rationality of patent fees. Courts around the world are also vying for the right to speak. This domestic court's judgment on global patent rates provides a precedent reference for similar disputes in the future, and also provides reference value for communications and related industries on 5G patent fees.
In this judgment, the value proportion of each generation standard of 2G, 3G, 4G and 5G in 5G multi-mode mobile phones was also determined. The corresponding value ratio of 5G-2G is 50:40:5:5.
Previously, according to Nokia's existing 5G patent charging standards, if calculated based on a company's global mobile phone shipments of more than 100 million units, it would be an annual patent fee of 300 million to 400 million euros. In the statistical report of the Institute of Information and Communications Technology, Nokia’s 5G standard patents account for 6.82%. If the industry’s 5G standard patents are converted to 100%, if all patentees charge according to this standard, a mobile phone will cost more than 45 US dollars in patent fees (calculation method: exchange rate, 3 euros ≈ 3.2 US dollars; 3.2 US dollars * 100% divided by 6.82% = 46.92 US dollars).
However, according to this ruling, the standard cumulative rate of 5G on mobile phones is 4.341%-5.273%. Regardless of the proportion of multi-mode systems, the upper limit of 5G patent fees for a $200 pure 5G mobile phone is $10.55. For mobile phone manufacturers, the cost pressure caused by patents has been alleviated.
In addition, the more important significance of this judgment is that because of the cumulative rates for the mobile phone industry, there are also reference standards for the use of 5G technology in automobiles and the Internet of Things.
The global patent dispute between Nokia and OPPO broke out in July 2021. The two parties have launched offensive and defensive battles in multiple jurisdictions such as Germany, the United Kingdom, France, Finland, Sweden, India, Indonesia, and China, including infringement litigation, rate litigation, and patent invalidation. So far, Nokia and OPPO have initiated two global FRAND rate lawsuits regarding this dispute. The jurisdictions include the United Kingdom (High Court of England and Wales) and China (Chongqing No. 1 Intermediate People's Court).
Regarding the judgment, OPPO stated that 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. OPPO hopes that Nokia can abide by and implement the Chongqing Court's global fee ruling.
Nokia said, "The Chongqing court's judgment shows that OPPO is obliged to pay patent fees to Nokia, and the fees OPPO needs to pay will cover the entire unauthorized period. Our goal has always been to resolve disputes fairly."