Huawei: Which 5G core patents cannot be circumvented by others?

      According to the Huawei Voice Forum on June 29, on the morning of June 27, 2019, Huawei released a white paper on innovation and intellectual property, and answered questions from Chinese and foreign reporters at a press conference held at its Bantian base in Shenzhen.

　1. Reuters: Four questions:

　　First, regarding Verizon, Reuters previously reported that Huawei demanded more than $1 billion in patent fees from Verizon. How is the current progress of this incident? How much is the patent fee being demanded? Please also explain why the request was made at this point in time? Is it specifically targeting American companies? Have you considered asking for patent fees from other operators or companies in the industry?

　　Second, Mr. Ren Zhengfei said this month that Huawei has many patents and can collect them when it is free. Currently, Huawei's product business has been affected by US sanctions. How much is Huawei's expected revenue from patent fees in the future?

　　Third, US Senator Marco Rubio is proposing a bill to ban Huawei from charging patent fees in the United States. How do you view the impact of this bill?

　　Fourth, this morning Bloomberg reported that Huawei employees participated in research projects with the Chinese military. What is Huawei's specific policy on employee participation and publication of research results, including cooperation with the military? Is it true that, as you said, employees conducted research in their personal capacity without the company's knowledge? Thank you!

　　Song Liuping (Chief Financial Officer of Huawei): Thank you for your question.

　　First, let me share a few thoughts on Verizon's patent licensing issue:

　　1) Huawei does not adopt an aggressive intellectual property policy. It is more aimed at protecting the global business security of its products. It is defensive in nature. We will not "weaponize" intellectual property rights, nor do we advocate high licensing fees. We believe that licensing fees should be set at a reasonable level.

　　2) For an industry standard industry like the communications industry, patent licensing is very common and normal. All companies are engaged in licensing and cross-licensing activities in this regard, including chip manufacturers, equipment manufacturers and operators. This also includes Chinese companies, European companies, and American companies. Mutual licensing between companies has been going on for a long time, not just starting today.

　　Huawei is one of the main holders of 3G, 4G, and 5G core patents. It is both a licensor and a licensee. As a holder of standard patents, it is a right and an obligation to obtain income through licensing. Huawei is obliged to license its patents to other industries and third parties in accordance with the principles of "fairness, reasonableness, and non-discrimination."

　　3) First, our patent licensing negotiation with Verizon is just a normal business negotiation and does not mean a change in Huawei's patent policy. This is an ongoing process. We have been negotiating patent licensing with industry stakeholders and it is not targeted at any specific country.

　　Second, regarding the patent fees mentioned by Mr. Ren, as a major patent holder in important international standards, we naturally enjoy relevant rights and fulfill relevant obligations, so there will be some relevant intellectual property income. However, Huawei is still a company that focuses on product management and will not become a company that focuses on patent fees.

　　Regarding the proposal by some American politicians to ban Huawei from enjoying patent rights, I think this is a very dangerous signal. Intellectual property protection is an important foundation for the development and innovation of the United States, and intellectual property is also protected by the U.S. Constitution. If such a law is passed, it will have a devastating impact on global innovation. Therefore, we think it is very scary if such a law is passed.

　　Third, I would like to make a few responses to media reports that employees and military personnel jointly published papers:

　　1) Huawei is a company that provides civilian communication systems and ICT product solutions. Huawei does not provide specific products or research for the military.

　　2) We are not aware of any articles published by certain employees, and we do not have such a cooperative project.

2. Global Times: Regarding Verizon, there have been previous reports that even if the United States bans Huawei from entering the US 5G market, US companies will not be able to circumvent Huawei's patents. Can you give some specific examples of Huawei's 5G core patents that others cannot circumvent? What percentage of 5G patents do they account for?

　　Song Liuping: First, Huawei is a major contributor to ICT technology. As an industrial standard industry, all participants will research, develop, produce, and manufacture their own products and operate networks in accordance with international standards. Huawei is one of the main contributors to standards, and all companies in the industry that use these standards are sharing Huawei's technological achievements and bringing them value.

　　Second, Huawei is also one of the main holders of standard essential patents in telecommunications standards (3G, 4G to 5G, especially 4G and 5G and beyond). These patents have been applied for and registered around the world, including in the United States, China, Europe and other countries. If the standards are used or adopted in the corresponding countries, these authorized patents must be used.

3. Wall Street Journal reporter: Three questions:

　　First, you just mentioned that no court has ever found Huawei guilty of intellectual property theft and demanded compensation. However, in 2007, Huawei paid T-Mobile $4.8 million in a case involving robot theft. Could you please clarify what the $4.8 million was?

　　Second, you mentioned that no court has ever found Huawei to have maliciously stolen intellectual property, but many of Huawei's cases involving intellectual property theft were settled before the trial. Has Huawei ever paid fees to the relevant parties in these cases that were settled before the trial?

　　Third, earlier today, a US court ruled that Huawei stole the intellectual property of one of its US partners, CNEX. Please respond. Thank you.

　　Song Liuping: First of all, no court has ever determined that Huawei maliciously stole intellectual property and demanded compensation for it. This is also a key point for many American politicians to attack and smear Huawei. The $4.8 million you mentioned for T-Mobile refers to a breach of contract, not malicious theft of intellectual property.

　　The second question is that all global companies in the industry will face disputes and lawsuits related to intellectual property rights. We believe that intellectual property lawsuits are actually legal issues that should be heard and judged by the courts and should not be politicized. As for the cases you mentioned in the United States, these cases have corresponding joint statements or public statements after the settlement. These statements are very clear, so I will not repeat them.

　　Regarding the CNEX case, please let Ding Jianxin answer.

　　Ding Jianxin (Head of Huawei's Intellectual Property Department): The judge in the CNEX case has not yet made a final ruling. Currently, there is only a jury ruling, which we just received last night and are still studying. The jury's ruling supports Huawei's claim that Huang Yiren, the party involved in the case, violated the employment contract.

　　The jury did not give a ruling on relief or compensation, and Huawei will consider the next step based on the verdict. During the trial, Huawei presented a large amount of evidence to prove that a former Huawei employee dismantled the hard drive and downloaded a large number of documents from Huawei before leaving Huawei to join CNEX, and the parties also admitted this fact. Although the facts of the case are clear, the jury did not support our claim that CNEX stole Huawei's trade secrets. We are disappointed, but we still have confidence in the entire US judicial system and will continue to use US judicial procedures to protect our rights.

4. CGTN reporter: Two questions:

　　First, regarding Marco Rubio’s latest proposal, if the proposal is passed, how should Huawei respond?

　　Second, if the ban on Huawei continues to expand, even to the field of intellectual property rights, will it have a major impact on Huawei's 5G global deployment and future development? Thank you!

　　Song Liuping: We do not believe that Rubio's legislative proposal will be passed. This legislative proposal shakes the most important system that human innovation relies on - the intellectual property protection system. If this law is passed and our rights and interests are harmed, we will also use legal means to safeguard our legitimate rights and interests.

　　5. Reporter: In 2003, Huawei and Cisco reached a settlement. Can you tell us more about the details of this case? Does this case fall under the category of subjective malice? In addition, how do we define subjective malice intellectual property infringement? Thank you!

　　Song Liuping: There is a public statement on the Cisco case with detailed content, which you can check. The subjective malice you mentioned is not defined by us, but by the court and jury when they made the verdict, and it has a clear legal definition.

　6. Reporter from 21st Century Business Herald: Two questions:

　　First, you mentioned that Huawei will not weaponize patents and will only pursue reasonable income. Huawei ranks first in 5G patents. How does Huawei plan to charge for 5G patents?

　　Second, Qualcomm said in its financial report in May this year that it was negotiating with Huawei on patents. It was reported that Huawei and Qualcomm reached a temporary patent fee agreement in December last year. How is the negotiation going now? Thank you!

　　Song Liuping: I just said that Huawei’s basic intellectual property policy is defensive rather than offensive, so we will not “weaponize” intellectual property.