On September 13, Chinese tech giants Huawei and Xiaomi announced that both companies had reached a global patent cross-licensing agreement. The agreement covers a range of communication technologies, including 5G.
The new agreement has put an end to Huawei’s patent infringement lawsuit against Xiaomi, reported in March this year. The case concerned four patents held by Huawei that Xiaomi had allegedly infringed, related to 4G/LTE technology, phone photography, and unlocking technology.
“This license agreement [with Xiaomi] once again underscores the industry’s recognition of Huawei’s contributions in the field of communication standards and allows us to strengthen our research investment in future mobile communication technologies,” said Alan Fan, head of Huawei’s IP department.
Inking this agreement with Xiaomi builds on the momentum Huawei has been generating in patent licensing. In August this year, the company signed a similar long-term agreement with multinational telecommunications company Ericsson, covering patents essential to a wide range of cellular technology standards including 3GPP, ITU, IEEE, and IETF. The agreement with Ericsson is just one of around 200 bilateral licensing agreements Huawei has entered into, partnering with over 350 companies including Oppo, Samsung, Audi, Lamborghini, and more.
While Huawei has consistently prioritized patent licensing as one of its core businesses, filing record-high numbers of patent applications across multiple jurisdictions, its patent business has newfound importance following its clampdown in the US. Following the crackdown on its device business, patent licensing offers an alternative revenue source for Huawei, especially in domains like 5G, Wi-Fi, audio and video compression technology, where it has developed multiple high-value patent portfolios.
According to Fan, Huawei’s licensees originate from a wide variety of fields, including smartphones, connected cars, networking, internet of things, smart homes, among others. As of June 2022, over two billion smartphone devices and eight million connected vehicles licensed with Huawei’s patents are delivered to consumers every year, based on data collected in the preceding five years (2017–2021). The company owns about 10% of the world’s 4G patents, and around 20% of patents related to 5G, Wi-Fi 6, and H.266 technology.
Based on its annual report filed in 2022, Huawei holds over 120,000 active patents, significantly more than in previous years. In 2019, the company held around 85,000 active patents, around 40% less than the figure reported in 2022.
According to Reuters, Huawei earns more patent royalties than it pays out, with its patent licensing revenue amounting to USD 560 million in 2022. However, this equates to a minute percentage of the company’s total revenue (less than 1%), which was reportedly USD 93.5 billion in 2022. Scaling back its device business has also reduced Huawei’s patent payments.
