Sunday, November 6, 2022

Xiaomi is settling video codec patent lawsuits with Access Advance licensors--but not necessarily taking a pool license

The Dusseldorf Regional Court used to be the world's leading video codec patent litigation venue--and it may still be, though Munich has gained popularity. Four licensors of Access Advance's HEVC (H.265) pool sued Chinese consumer electronics giant Xiaomi over H.265 standard-essential patents (SEPs): Philips, Mitsubishi, General Electric, and IP Bridge. The latest information that I've obtained from the Dusseldorf Regional Court's press office suggests that those lawsuits are coming to an end, but interestingly, Xiaomi and the various litigants may be opting for bilateral licenses instead of a pool license.

Let's take a step back. The most important Access Advance licensor is Samsung, but Xiaomi is licensed to those patents by virtue of an MPEG LA license it took in early 2020, shortly before Samsung left MPEG LA.

In March, Xiaomi settled a patent dispute with Philips that involved not only video codecs but also wireless standards. As a result of that settlement, Philips withdrew all lawsuits against Xiaomi, including any case(s) over video codec patents.

That left three plaintiffs from Access Advance's circle of licensors: Mitsubishi, General Electric (GE), and Japanese licensing firm IP Bridge. Here's what the Dusseldorf Regional Court has told me about those cases:

  • Case no. 4c O 50/20 (Mitsubishi v. Xiaomi) has been stayed by stipulation of the parties. Note that this is not a stay for the duration of a parallel nullity or opposition proceeding that is deemed likely to dispose of the case ("Aussetzung") but the kind of stay that parties seek when they believe they can work out a near-term settlement. That kind of stay is called "Ruhen" in German and rarely happens in patent infringement actions.

  • Cases no. 4c O 49/20 and 57/20 (General Electric v. Xiaomi) have also been stayed by stipulation ("Ruhen").

  • Case no. 4c O 51/20 (IP Bridge v. Xiaomi) was stayed by the court as Xiaomi's nullity complaint pending before the Federal Patent Court appeared likely to succeed.

It's unlikely that any of those cases will go anywhere. But what's the endgame? A set of bilateral licenses (to the extent that Xiaomi isn't already licensed to some of those patents thanks to MPEG LA)--or a pool license?

A pool license is an efficient one-stop solution; but when a pool has high administrative fees and when there are disagreements on how to avoid (partly) duplicative royalties, bilateral licenses may be easier for the parties to agree on.

If all complaints had been near-simultaneously withdrawn, the most plausible assumption would be that Xiaomi has taken a pool license. That would be the Tesla-Avanci pattern, where several cases brought by Avanci licensors against the automaker were voluntarily dismissed at around the same time, and no Avanci licensor has since filed suit against Tesla. It seemed odd that Tesla subsequently submitted an amicus brief against Avanci, supporting Continental's case that went nowhere and is now officially dead. That oddity, however, was outweighed by the extremely strong indications of a pool license that I mentioned before. But the Access Advance/Xiaomi situation is nowhere near that clear-cut. The procedural status of the IP Bridge case differs from that of the GE and Mitsubishi cases; Samsung's patents are the most important ones and Xiaomi is licensed to them; and what's telling is that Xiaomi agreed on a bilateral license with Philips instead of simultaneously taking an Advance license and settling only the non-codec parts of the dispute with Philips.

There's also a possibility of Xiaomi taking several bilateral licenses first, and a pool license later, just like Daimler settled with Sharp and Nokia before ultimately signing up to Avanci.

I'll try to find out more.