Wednesday, February 8, 2023

China-based 5G chipset designer UNISOC contributes its patents to Sisvel's 5G standard-essential patent pool for smartphones, other consumer electronics products

When new licensors join a pool, it always means that additional patent holders believe in the pool's success, and that the value proposition to licensees becomes more attractive. Depending on who joins, additional aspects may be relevant. That is the case with what Sisvel announced this morning: Shanghai-based 5G chip design company UNISOC (formerly known as Spreadtrum) has joined Sisvel's 5G Multimode patent pool for consumer electronics products (smartphones, tablets, etc.).

UNISOC--a fabless chip maker--is not to be confused with Uniloc, a patent licensing firm that drew the ire of Apple (with whom it has meanwhile settled) and others a few years ago.

In December I reported on the creation of that pool. The initial group of licensors included players like Mitsubishi, Siemens, and various telcos, which suggested substance (in terms of their portfolios) as well as a reasonable diversity as telcos are major implementers. It's a good sign for a pool when its terms are appealing to patent licensing firms as well as net licensees. UNISOC falls into a key category: it's a supplier to major implementers.

According to Counterpoint Research, UNISOC's global smartphone chipset market share in the period from Q2 2021 to Q3 2022 was 9%, making it the fourth largest player. The top three are Mediatek, Qualcomm, and Apple, but UNISOC has a greater market share than Samsung (which actually incorporates UNISOC chips into the Galaxy A series) and Huawei's HiSilicon combined (the latter is obviously affected by geopolitics). A particularly interesting UNISOC customer is realme, the low-price brand of the OPPO group. In certain markets, Nokia is asserting patents against realme as my Nokia-OPPO battlemap indicates.

The head of UNISOC's legal department, Yang Jiejing, contributed the following quote to Sisvel's press release:

"UNISOC is a world leading 5G chip design company. We look forward to cooperating with Sisvel through its 5G MM Licensing Program to offer implementers 5G patent license at a fair and reasonable rate, which will further promote the widespread adoption and development of 5G technologies."

Obviously, no patent holder would ever say "we joined pool X because it's a tremendous vehicle to extract supra-FRAND royalties from implementers." That's why my plausibility check always involves a company's business interests. In this case, we are talking about a supplier of 5G chips, and particularly one from China and with major Chinese customers, including some rather price-sensitive ones. That, to me, serves to validate my initial reaction, which was that the pool rate would easily be deemed FRAND (should a court reach that question).

At a Licensing Executives Society International webinar last month, Sisvel president Mattia Fogliacco explained his firm's efforts to offer palatable licensing terms. Those efforts include the Licensing Incentive Framework for Technologies (LIFT), a mechanism that encourages early adoption and discourages hold-out. But like any other intermediary, a pool administrator primarily has to identify the right price points that bring both sides of the market together (and then has to execute effectively and efficiently).

After Via Licensing's exit from cellular SEP licensing, there has been some consolidation by virtue of former Via licensors joining Sisvel's pool. Things should go smoothly for this pool. Other licensors may very well follow UNISOC's example, but the ball is now primarily in the implementers' corner.