Context: It is well-known that Western standard-essential patent (SEP) owners have struggled to (publicly) license to Chinese automakers. Nokia has so far been the only major SEP owner to publicly succeed, confirming at the end of last year that it struck its second-ever patent license agreement with a Chinese car maker (December 17, 2024 ip fray article) – its first was made public last April.
What’s new: Two Chinese automotive industry associations, China Automotive Technology & Research Center Ltd. (CATARC) and China Society of Automotive Engineers (CSAE), have been encouraging their members not to take a license from Avanci – and that they should only agree to pay rates as low as 10% of what the pool operator charges for its global SEP licenses, three Chinese sources close to the matter have told ip fray.
Direct impact: CATARC and CSAE’s pressure on automakers may be why only one (unnamed) Chinese automaker has so far been confirmed to have taken an Avanci license, according to the sources we have spoken to. Meanwhile, virtually all major car makers outside of China and India are known to be licensed (October 9, 2024 ip fray article).
Wider ramifications: News also emerged last week that Avanci SEP licensor Sol IP filed two patent infringement complaints against Chinese automaker BYD in the Landgericht München I (Munich I Regional Court) (February 19, 2025 ip fray article). More parallel actions could possibly soon follow if the associations’ pressure continues to dissuade Chinese car manufacturers from taking a license.
Pointing to a report published by CSAE in December (December 20, 2024 WeChat post), one source, speaking on the condition of anonymity, told ip fray that the report was “certainly sponsored and encouraged by some Chinese automobile manufacturers, aiming to make their voices heard and to increase their bargaining chips in negotiations with Avanci”.
The report also suggests that the reasonable cumulative licensing fee for SEPs in China’s automotive cellular communication market is approximately 7.125-16.362 Chinese yuan ($0.98-2.26) per vehicle (4G multimode) and 8.895-19.840 Chinese yuan ($1.23-2.74) per vehicle (5G multimode).
They commented:
“This fee is significantly lower than the licensing fees currently charged by Avanci. Based on this, it can be reasonably inferred that the CSAE does not consider Avanci’s current licensing fees to be reasonable. As a result, automakers are not encouraged to take a license from Avanci at the current fee levels.”
Soon after, Avanci responded to the report (January 13, ip fray article), stating:
“Due to a lack of direct communication with Avanci, there are numerous inaccuracies in the report regarding the Avanci solution.”
Another source highlighted that the CSAE’s report was not conducted alone; CSAE and CATARC worked in parallel to produce the content and that this is not the first time they have collaborated, they said.
They have a history of collaboration in various areas:
- Standard development: CSAE and CATARC have collaborated on developing and harmonizing automotive standards. For example, they have jointly worked on standards related to electric vehicles, functional safety, and intelligent driving.
- Certification programs: In 2020, CSAE and CATARC jointly launched the CL2-level intelligent driving certification, marking the first such certification in China.
- Research initiatives: They have also collaborated on research projects related to carbon neutrality and future automotive technologies.
Avanci declined to comment on the CATARC issue specifically but a spokesperson stated:
“More than 100 auto brands and around 200 million vehicles are covered by an Avanci license, significantly reducing risk and enhancing compliance. We have had many in-depth conversations with Chinese automakers over the years and we continue to invite them to participate as licensees in our 4G Vehicle and 5G Vehicle programs, where they can obtain essential patent rights on a level playing field with their peers from around the world.”
In a statement to the Office of the United States Trade Representative commenting on the ongoing unlicensed use of essential IP by China’s auto industry last month (January 28, 2025 Avanci statement (PDF)), the pool operator said:
“This unlicensed use of essential IP by China’s auto industry not only affects rights-holders in the United States but also means that Chinese automakers are not operating on a global level playing field with their competitors globally who do license the cellular connectivity technologies on which they rely. Avanci has been engaging in licensing discussions with Chinese automakers for several years and we continue to closely engage with industry players in China. Yet even as Chinese automakers have become formidable global competitors, the fact remains that they are not operating on a global level playing field so long as they continue their unlicensed use of the patented connectivity technologies essential to the connected vehicles they sell worldwide.”
Avanci has made significant headway on the licensor side in China. All three of the country’s major mobile network providers (China Mobile, China Telecom and China Unicom) are among the Avanci 5G Vehicle licensors. They are joined by Coolpad, Datang Telecom Group, Huawei, NERC-DTV, and Oppo.
China Mobile, Datang, Huawei, and Oppo are also among the list of licensors for Avanci 4G Vehicle.