Context: It was surprising, or at least unprecedented, to see smartphone maker OPPO divest some of its 5G standard-essential patents (SEPs) to Toyota (July 29, 2024 ip fray article).
What’s new: China’s Intellectual Property Finance blog now reports (in Chinese) that the assignment of 20 U.S. patents, apparently 5G SEPs, has been discovered in United States Patent & Trademark Office (USPTO) assignment records. As Intellectual Property Finance notes, the fact that U.S. patent assignments are easiest to discover doesn’t mean that a deal is limited to U.S. assets: more likely, entire patent families were assigned.
Direct impact & wider ramifications: While OPPO as a rather young company is far stronger in 5G than 4G, Philips may have seen a need to build a more There are two possible explanations with different implications for other patent divestitures we may see from OPPO going forward. As will be discussed below, the far most plausible explanation is that it was a package deal that enabled a settlement (January 16, 2024 ip fray article) while giving the parties some additional value, inevitably also compromising the comparability of the deal for FRAND purposes.
Here’s the plausibility/probability analysis of why and when OPPO did this deal:
- The far more likely one in ip fray‘s opinion (without having had any chance to ask anyone for comment or background information) is that these assignments are a direct result of the settlement of Philips’s patent assertions against OPPO that became discoverable earlier this year. The deal will have involved patent assignments, and it always takes time before those are registered and show up. The combination of patent ltigation settlements and divestitures is not uncommon. Most settlements are pure license agreements, but asset purchases are part of a minority of such deals.
- In the alternative, the asset deal would have been done after the settlement, which would mean that OPPO is now generally prepared to sell patents to companies known to bring litigation (unlike Toyota).
- While there would be nothing wrong with OPPO simply disposing of its intellectual property rights in any lawful way it pleases, a separate deal with Philips is far less likely than the asset purchases having been agreed upon as part of a larger deal. Bringing a patent transfer into the game may have helped the parties overcome an impasse in negotiations and could also make the deal terms interpretable in ways that better suit the parties’ needs in other FRAND negotiations and disputes with a view to what the comparable license terms are.
The Toyota deal shows that OPPO wasn’t “blackmailed” by Philips. In fact, Philips had potential leverage only in markets that OPPO had left or was prepared to leave if necessary. Given that OPPO also sold patents to a company that wasn’t suing, it’s 100% clear that OPPO acted voluntarily even if the deal (as ip fray assumes) was the combination of a license agreement settling litigation and a patent transaction.
For those who do not have a license deal in place with OPPO, but have exposure to its patents, it would obviously have been preferable if OPPO had sold those 5G patents to, for instance, an automaker like in the Toyota case, as assertions and royalty demands would then be much less likely.
It will be interesting to see who is next to acquire patents from OPPO, a company that many in the IP community only considered a “victim” of patent assertions, but which is a major innovator and patent filer (including, but not at all limited to, 5G).