Huawei Technologies has initiated a lawsuit against MediaTek for alleged patent infringement, as reported by Nikkei. The case, filed in a Chinese court, represents one of Huawei's broader strategies to boost revenue through licensing fees and royalties. Although MediaTek confirmed the lawsuit, the company has refrained from disclosing specific details about the patents involved or the nature of the allegations.
MediaTek, a leading supplier of application processors for smartphones and other consumer electronics, counts major brands like Amazon, Samsung, Oppo, Sony, Vivo, and Xiaomi among its clients. Many of these companies are either based in China or manufacture their devices there, making the outcome of this lawsuit crucial for MediaTek's business operations. A ban on MediaTek's processors in China could have devastating effects on its business.
The lawsuit was acknowledged by MediaTek in a filing with the Taiwan Stock Exchange, where the company stated that the litigation would not significantly impact its operations. However, MediaTek declined to comment further on the case.
According to sources from Nikkei, Huawei's lawsuit aims to secure royalties that would fund its ongoing research and development efforts. Huawei holds a substantial portfolio of standard-essential patents, particularly in 5G technology, accounting for about 20% of global patents in this field. Since 2021, Huawei has intensified efforts to monetize its patents, establishing licensing agreements with various European automakers, including BMW, Mercedes-Benz, and the Volkswagen Audi Group (VAG).
In 2022, Huawei's patent royalties amounted to $560 million, with around 200 companies, including Amazon, Samsung, and Oppo, paying for the use of its technologies. This lawsuit against MediaTek continues Huawei's history of litigation to enforce patent rights. Previous lawsuits include actions against T-Mobile in 2014, Samsung in 2016, Verizon in 2020, and more recently, Amazon and Netgear in 2022 over Wi-Fi patents.
Despite over two years of negotiations, the patent dispute between Huawei and MediaTek remains unresolved. A source close to MediaTek disclosed to Yicai that the disagreement centers on the fees Huawei demands for its technology, with MediaTek finding the costs excessively high. This impasse has kept the case active in the courts, with no immediate resolution in sight.
Unlike traditional patent disputes involving telecom equipment manufacturers like Qualcomm and Nokia, Huawei's litigation targets a chip manufacturer rather than a mobile phone maker. This shift in strategy could have broader implications for the industry. If patent fees are redirected to component manufacturers, end-product makers such as Apple, Samsung, Huawei, and Xiaomi might incur lower patent licensing costs, potentially reducing smartphone prices.
Huawei has outlined two primary approaches to global patent licensing: bilateral licensing between two companies and "one-stop" licensing via patent pools. These pools allow participants to either provide or obtain licenses from other members. Huawei has also suggested two main methods for setting rates: a fixed fee per terminal or a percentage-based fee.
In recent years, Huawei has expanded its patent revenue globally. Shen Hongfei, vice president of Huawei's legal department, emphasized the company's stance that patent charges should be reasonable. In 2022, Huawei's patent licensing revenue exceeded its patent expenses for the second consecutive year, underscoring the financial significance of its intellectual property strategy.
