Transferring patents to Ericsson, the patent troll that defeated Huawei, is a wise move

Unwired Planet is a patent-holding company that primarily earns revenue through patent litigation with various companies, meeting the definition of a "patent troll". Most of its patents come from Ericsson. Following its earlier victory over Huawei in a lawsuit in the UK, it recently forced Apple to compromise with it and reach a patent payment agreement.

In 2015, Unwired Planet sued Huawei in the UK. After nearly two years of trial, the High Court of England and Wales ruled earlier this month that Huawei had used Unwired Planet's patents and required it to pay patent fees to the latter at a rate of 0.051% for 4G devices, 0.052% for 4G mobile phones, 0.032% for 3G mobile devices, and 0.016% for 3G infrastructure. This is an increase of about 50% compared to the previous rate of 0.034% for 4G devices.

After Unwired Planet sued Apple in the United States, Apple countered that the patents were worthless. But interestingly, before a U.S. court made a ruling, the two companies reached a settlement agreement. Although the two parties did not disclose the amount paid by the latter to the former, it undoubtedly proved the value of the patents owned by Unwired Planet.

Over the past decade, Ericsson's business has been shrinking. Its mobile phone chip business was forced to form a joint venture with STMicroelectronics under competition from Qualcomm, but the business was eventually disbanded. Its mobile phone business was formed in a joint venture with Sony to form Sony Ericsson, but later Ericsson's equity in the joint venture was completely acquired by Sony. Ericsson's core telecommunications equipment business was also surpassed by Huawei in 2014, and its CEO resigned due to poor performance. Rumor has it that it may be acquired by Cisco.

After losing its mobile phone chip and mobile phone businesses, Ericsson hopes to turn its patents into cash income. In 2015, Ericsson's overall revenue was 246.9 billion Swedish kronor (about 28.9 billion U.S. dollars), and its net profit was 13.7 billion Swedish kronor (about 760 million U.S. dollars), a year-on-year increase of 23%. Among them, patent fees were the main source of its profit growth. This year, its patent fee income was about 1.7 billion U.S. dollars, a year-on-year increase of 46%.

Ericsson's targets for collecting patent fees are undoubtedly Apple, Samsung and Chinese mobile phone companies, but because its telecommunications equipment business revenue mainly comes from the European, American and Chinese markets, it needs to consider the local impact when suing these companies. At the end of 2014, it sued the Chinese mobile phone company Xiaomi in the Indian market probably because of this factor. Transferring patents to companies such as Unwired Planet and then suing these target companies can avoid affecting its local telecommunications equipment business.

Facts have also proved that the patents transferred by Ericsson to Wireless Planet have a strong deterrent effect. In addition to Huawei and Apple mentioned above, Wireless Planet also sued Google, Samsung and other companies in 2015. Before the lawsuit, Google chose to reach a settlement with Wireless Planet, and during the litigation process, Samsung also chose to settle.

Another puzzling thing is that Unwired Planet did not pay a one-time fee for the patents it acquired from Ericsson, but reached an agreement with it to pay the latter in return after earning revenue through patent litigation, which seems to indicate a certain cooperative relationship between the two parties.

Ericsson can successfully monetize its patents in this way, but avoid directly initiating lawsuits in the local area and causing adverse effects on its own telecommunications equipment business. From this perspective, its approach is quite wise.

Ericsson also recently disclosed its 5G patent charging standards. Its executives said that the 5G patent licensing fee for high-end handheld devices is US$5 per device, while the patent licensing fee for low-end handheld devices can be as low as US$2.5 per device. This is the first company among companies with 5G patents to disclose its 5G patent licensing fees, indicating that it is eager to obtain more patent fee income to make up for the impact of the decline in telecommunications equipment business.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.