An update on our dispute with OPPO

An update on our dispute with OPPO

An update on our dispute with OPPO

Shortly before Christmas, InterDigital won a significant court victory against OPPO in Germany as part of our pursuit of fair and reasonable compensation for our patented innovations.

The Munich Regional Court I ruled that InterDigital has acted in a FRAND manner, that OPPO infringed InterDigital’s 5G patent in suit, that OPPO is not a willing licensee and thus has not acted in a FRAND-compliant manner, and that InterDigital should receive injunctive relief in the German market. In short, it was a clear-cut verdict against OPPO and highlights a pattern of blatant holdout behavior which, unfortunately, has become all too familiar for innovators in standardized technologies like cellular wireless. OPPO does have the right to appeal this judgment.

The German case is just one part of our ongoing dispute with OPPO but, given the court’s stern criticism of OPPO’s behavior, I thought I would take this opportunity to provide an update on where we stand in our fight to be compensated fairly for our innovations.

No evidence of willingness from OPPO

Among several key takeaways, the Munich verdict showed once again that FRAND licensing is a two-way street. It is not just the SEP owner who should be expected to drive negotiations and to show a willingness to conclude a license on FRAND terms. The infringer must also demonstrate a clear commitment to negotiating in good faith and, in respect of this obligation, OPPO has been shown to be severely lacking.

In the part of the Munich verdict, which is perhaps most critical of OPPO, the three-judge panel reiterated that the infringer must clearly and unambiguously declare its willingness to conclude a license agreement with the patentee on reasonable and nondiscriminatory terms and must also subsequently participate in the license negotiations in a targeted manner. Our negotiations with OPPO have taken nearly a decade and OPPO has not made a single payment for its unauthorized use of our patented innovation. The judges also wrote that, “…taking into account the entire history of negotiations to date, a genuine willingness to negotiate and take a license on the part of [OPPO] cannot be established.”

OPPO’s track record demonstrates that its primary target is delay. As the Munich decision points out, "the lack of or delayed reactions by OPPO to the offers made by InterDigital, show that OPPO was not truly willing to contribute to bona-fide license negotiations.” According to the Munich court, OPPO has "impressively shown in the present proceedings how patent infringers practice hold-out by constant requests for comparable license agreements while at the same time, by doing so, trying to obfuscate their lack of willingness to take a license.”

In addition, the court ruled that OPPO’s counteroffers were unFRAND because they were based on rates that are significantly less than its licensed competitors are paying and assumed an average sales price for infringing devices that is well below the market.

The court also dismissed OPPO’s attempts to rely on the decision from the UK’s High Court in our dispute with Lenovo. This decision was ruled not to apply here because our LG agreement, on which the UK High Court based its determination, is limited to cellular SEPs, expired in 2020, and does not include 5G, and because the decision does not contain any discussion of German FRAND case law. Additionally, our negotiations with OPPO are for a license to a broader set of technologies than the Lenovo UK decision covered.

We initiated this dispute against OPPO to protect the virtuous cycle of innovation and to preserve the delicate balance on which it rests by ensuring that companies like OPPO pay a fair royalty for their use of patented technology. As the negotiation history shows, we did not rush to the courtroom to secure litigation-driven leverage.

On the contrary, we actively engaged OPPO in genuine negotiations and adhered to commonly accepted principles of FRAND licensing. I am particularly pleased that the Munich court has seen through the constructive refusal of OPPO to take a license and recognized that InterDigital´s behavior has been consistent with FRAND through the long course of negotiations.

A broader message

I also want to take this opportunity to reflect on what this verdict means for a broader audience, particularly those currently engaged in discussions over a new SEP regulation within the European Union.

Too often when SEP licensing is debated by policymakers, the spotlight overwhelmingly falls on the actions of SEP-owning innovators – likely because implementers are in the majority and drown out the voice of the innovation community. And yet, as several court decisions have demonstrated, it is so often the behavior of large and powerful implementers that is shown to contravene widely accepted FRAND principles.

As it is currently framed, the EU’s regulation does not address widespread holdout in any manner and would further tip the balance of power on the continent between innovators and implementers firmly in favor of the latter, benefiting the likes of OPPO and other device makers who are not based in Europe.

Innovation, such as 5G and advanced video compression, should be nurtured and protected in a way that both rewards innovators and allows technologies to be implemented in consumer devices. FRAND licensing is a vital part of this ecosystem and, as our resounding court victory in Munich shows, InterDigital is committed to negotiating on fair and reasonable terms.

Following this clear verdict I hope that OPPO now genuinely engages in negotiation and does not simply pay lip service to FRAND. Innovators and implementers have much more to gain by working together to deliver ever-more advanced technologies to consumers.