Reinventing the Millennium

Yike’s autumn press conference is over.

Compared with the spring conference in the first half of the year, Yike launched more products this time, including smart watches, flagship mobile phones, wireless headsets, magnetic charging and other accessories, as well as Zhang Yaqin, president of the Emerging Industries Division EBG. took the stage and announced the debut of the server chip "Jiuzhang" based on the ARMv8 architecture.

There were three people on stage during the entire press conference, but there is no doubt that the leader Fang Zhuo personally used his heart rate to reveal the essence.

When all products are released, a simple media interview is the last part of the entire conference, and there is no doubt that the performance of SoC Zhurong has become the focus of attention.

"Mr. Fang, Zhurong 04S integrates a baseband chip. What does this mean?"

Fang Zhuo answered literally: "This means that Mars does not need an external baseband chip."

"Mr. Fang, since Zhurong chip can make a breakthrough in baseband, does this mean that Yike will enter the patent licensing business?"

This question was quite pointed, and many media reporters listened attentively to Mr. Fang’s answer.

Fang Zhuo smiled slightly: "Yike has always had a patent licensing business, and our subsidiary WLS company has also been selling baseband chips, and it also has some share in the world."

For two consecutive questions, the head of Yike was a little secretive. A reporter simply pointed out the issue that everyone was most concerned about: "Mr. Fang, Yike was equipped with Qualcomm's baseband chip before this year, and it will no longer be used this year. Regarding Qualcomm chips, will the relationship between the two companies change? Will Yike compete head-on with Qualcomm on baseband chips again?"

"Qualcomm is a first-class IC design company. We have close cooperation with Qualcomm on chips and patents. This year's Selfy is still equipped with Qualcomm's Snapdragon 801, and its performance is also very good. Everyone should have said at the press conference just now After seeing Pan Ben’s introduction to Selfy, we are very confident about its sales this year.”

"As for the so-called head-on competition, I don't think it can be discussed."

Fang Zhuo hesitated for a moment and said with a smile: "At most there will be some side competition, but this is a good thing. Healthy competition is the driving force for each other to move forward."

The last question was raised by a reporter from abroad: "Mr. Fang, I heard that Yike and Qualcomm have not reached an agreement on the new patent licensing price. Will there be a patent lawsuit? How will Yike solve this problem?"

Fang Zhuo glanced at the reporter who asked the question. This reporter was very well-informed. He turned his head again, looked at the camera of the live broadcast of the press conference, and said succinctly: "We are ready."

Ten seconds later, the live broadcasts on YouTube, Yoshi, and Yike’s official website ended, and turned to the replay of Yike’s autumn conference.

In the conference room of Qualcomm's headquarters, many executives watched this scene and fell silent.

Yi Ke is ready...

What preparations have you made?

Do you already have baseband chips hidden in your hands, or are you already preparing for a big patent war?

Jacob, the head of Qualcomm, had a headache. He had been talking to Yike for a while, but the two sides did not agree with each other's price and conditions, so it was delayed until this time.

It was obviously a good situation in the past two years, why have we ended up in this dilemma today?

Should we remain silent, actively negotiate, or initiate patent litigation?

Jacob resisted the urge to sigh and asked flatly: "President Fang said he was ready. What do you think?"

There was silence in the conference room.

Just when Jacob was a little angry, he heard a voice from Vice President of Legal Affairs Hawes.

"Yike and Mr. Fang are already preserving evidence for the patent war." Hawes said with certainty.

Jacob frowned and asked the legal expert for his opinion: "How to say?"

"Yike has done a lot of communication patent combinations in recent years, using standard essential patents and non-standard essential patents to match them, and there are already some mutual authorizations with us." Hawes said seriously, "We have cooperated with Yike this year. Ke’s patent grant is actually an extension of the five-year framework that ended last year.”

"Since August, Yike has been actively negotiating with us to increase mutual licensing and try to change the way of collecting licensing fees. Jacob, what everyone, including President Fang said to the global audience, expressed cooperation with Qualcomm. relationship, these are all 'good intentions' and 'positive' that will be considered by the court."

“Our standard essential patents must comply with the FRAND principle. Past cases in the United States and Europe strongly support this. If it really comes to the judicial decision, what needs to be considered is to transform the FRAND principle into a third-party beneficial contract. Both parties should fulfill their obligation to negotiate in good faith.”

FRAND principle, Fair, Reasonable and Non-Discriminatory, fair, reasonable and non-discriminatory.

Hawes paused for a moment to indicate that this passage was important.

European and American courts usually recognize the FRAND principle as a contract with beneficial third parties. The implementer can request the patentee to perform contractual obligations. This "principle" is a substantive "contract" and has contractual validity.

As long as Yike, or as long as anyone is willing to pay a reasonable technology license fee to use the patent, the court will default that this fee is enough to compensate the patentee's losses and will limit the relevant injunction.

In other words, as long as Yike is willing to negotiate and pay money, Qualcomm's ban restrictions will not receive much support.

The attitude shown by Yike and Fang Zhuo is obviously that they are willing to negotiate and are actively fulfilling their obligations to negotiate in good faith. If mutual negotiations fail, the ruling will give a final price based on comprehensive considerations.

Jacob understood what Hawes meant. There were signs and possibilities here, but factors for the final decision were already being considered over there.

In other words, the goodwill shown by Mr. Fang is just an illusion. He is only active and does not pay fees. He only has good intentions and does not stop, just rushing for the final verdict.

Would thinking from this perspective be more consistent with my overall understanding of the other party?

Jacob gave an affirmative answer in his mind. The "reasonable license fee" under the FRAND principle is not a fixed number, but a negotiable range. Both parties maintain "goodwill", but the cognition is different. to the final verdict.

In addition, what is even more troublesome is that the industry practice of standard essential patents is to use it first and pay later. Once there is a falling out with Yike, I don’t know how long it will take for this expensive patent fee to be adjudicated.

Jacob thought for a moment and said: "If we sue Yike, one direction is to prove that Yike is trying to reverse patent hijacking."

Patent reverse hijacking means that companies like Yike strategically use the uncertainty and ambiguity of the FRAND principle to achieve the purpose of paying as little as possible, delaying payment or even not paying standard essential patent royalties.

There are actually relatively few cases in this area, because the party that owns the patent is often stronger, but now... Yike is not actually weak, it is doing things strategically.

Hawes nodded, mentally weighing the possibility of establishing Yike as a typical example of "patent reverse hijacking."

Precisely because there are fewer such cases, it may increase feasibility.

"Jacob, Hawes, in fact, the FRAND principles between us and Europe are more beneficial to Yike's current behavior, but China's side is theoretically beneficial to us." Senior Vice President Daisy pointed out A plus.

Hawes immediately agreed: "Indeed, according to Chinese law, standard essential patents belong to the private property of our patent holders. Yike's unauthorized implementation of the patent is an infringement of patent rights."

This is a different interpretation of the FRAND principle in different countries.

Jacob looked at the two people faintly, nodded and said: "Yes, Daisy, your wording is very strict. We do have a 'theoretical' advantage in China."

Daisy and Hawes both shut up.

"Our revenue in China this year may exceed 43%, and the Chinese market is very important to us." Warren, another executive director, reminded of the importance of the Eastern market, "and this proportion may grow in the future."

Jacob frowned and said: "You mean... we have to actively reach an authorization agreement with Yi Ke?"

"No, what I mean is that the more important it is, the more we must try our best to defend our position." Warren said seriously, "There is a saying in China that peace is promoted through fighting. Qualcomm directly reached a patent licensing agreement with Yike , reduce costs, and give up market share. If such a mobile phone manufacturer appears, what will other manufacturers think?"

He continued: “The more times this happens, the more resolute we must file patent litigation.”

Hawes, who had always been in charge of this area, heard such pressure and immediately objected: "No, Warren, your handling is not in good faith, and it is very detrimental to the final ruling. Even if you want to file a lawsuit, it will take a long time." Let’s wait until our multiple rounds of negotiations collapse.”

Warren held a different opinion: "Yike has made a breakthrough in baseband. We can't just look at Yike now, but also pay attention to more changes that Yike is trying to bring. Yike can challenge our position, but we can't." It is the most terrifying thing to allow it to challenge so easily and not allow it to challenge more helpers."

He believes that Qualcomm’s attitude must be clearly expressed to prevent Yike from expanding its influence.

Jacob nodded slightly, with the same unwillingness, and actively negotiated with Yike in good faith. This was a way to solve the problem, but it was tantamount to showing a weak attitude to other manufacturers.

If it can establish its authority on Yike and defend its dominant position in the market, it will undoubtedly be a deterrent to other manufacturers.

Jacob had an inclination in mind and continued to listen to everyone's discussion for a while. He said as CEO: "Yike is trying to use its mobile phone market positioning to shake our communication patent market advantage. Once we give in, it will compete with Apple’s patent licensing framework will only get stronger and stronger. No matter what, we cannot be silent and sit back and watch Yike pull the battle line apart.”

Hearing this, Hawes reminded: "We must face up to China's tilt towards Yike."

"China has a bias, and we also have it. Moreover, Yike's breakthrough in this area is more sensitive. Qualcomm's demands based on standard essential patents are normal." Jacob said seriously, "We must fight back."

Hawes reserved his opinion. Jacob's decision may be right, but China may not respond quickly.

Jacob looked around at the executives present and ended the meeting with one sentence: "Gentlemen and ladies, let's welcome the plunge in our stock price today."

As soon as these words came out, everyone became helpless.

It dropped like this before the market opened, how much will it drop in one day...

At the close of the day, there is no need to look at the stock price, the news will give the answer directly.

——"Yike SoC chip integrates baseband, Qualcomm stock price plummeted 13.6%"

——"Qualcomm encountered Black Tuesday, and its market value evaporated by more than 10 billion"

——"Yike's autumn press conference has become a killer for the stock prices of many listed companies, with Apple, Samsung, Qualcomm and other companies all experiencing declines"

…

"What did Qualcomm say? Still no movement?"

Five hours after the Yike press conference ended, Fang Zhuo worked overtime at night, waiting for possible communication. However, Qualcomm disappointingly took no action.

"No, they may be weighing it," Yu Hong replied, "But I think their silence is quite unusual. They may be waiting for the launch of our product to start a lawsuit."

"The Iron Triangle is not stable enough." Fang Zhuo sighed, thinking about the possible patent war. "Qualcomm is just too expensive and the charging method is too unreasonable. You can't blame us for wanting to change. Who in the world doesn't Say it’s expensive.”

He continued: "Qualcomm is simply engaging in patent hijacking to force us to pay money. If it were really a lawsuit, the National Development and Reform Commission would be really rude."

"Well, you should tell Qualcomm directly that you will report it, so that they can take advantage of it." Yu Hong smiled.

"I don't tell, Jacob should know, but it's all talk and no tricks." Fang Zhuo shook his head and suddenly realized, "No, what do you mean I am snitching? Many people on the anti-monopoly side Director, he has received reports since 2009, and guess what, the first two reporting companies were from the United States."

Yu Hong said in surprise: "American companies came to us to report Qualcomm's monopoly?"

"Well, our anti-monopoly law was not long into effect at that time." Fang Zhuo thought for a moment and continued, "At that time, it was also popular to make small reports against Qualcomm. Six companies including Ericsson, Panasonic, and Texas Instruments sued in the EU in 2005. Qualcomm, Broadcom sued Qualcomm in the United States, and also sued Qualcomm in South Korea and Japan. It is too expensive, no wonder it caused public outrage."

As he said this, he took out a document on the table and handed it to Yu Hong.

Yu Hong flipped through the pages and quickly saw what she had just heard. The final result was settlement, withdrawal of lawsuit, Qualcomm compensation, Qualcomm fine...

"Qualcomm has rich experience in patent litigation and cannot be underestimated." Fang Zhuo said seriously.

Yu Hong nodded slightly, half of Qualcomm's job is to do this.

Fang Zhuo thought for a while and suddenly smiled: "Fortunately, our experience is not too bad."

Since the release of its smartphones, Yiko has fought patent litigation with many companies, including Nokia, Samsung, Apple, HTC, LG...

There have been lawsuits and counterclaims, injunctions and overturns, settlements and mutual grants.

When it comes to experience, we can also pay tribute to our predecessors.