Ruling in Oppo vs Nokia addresses patent royalties row

In a recent landmark ruling, the Chongqing Intermediate People's Court established a set of global FRAND (fair, reasonable and nondiscriminatory) royalty rates for SEP (standard essential patent) licensing for cellular handsets in Oppo vs Nokia. Regarding the 5G standard, $0.707 per unit was designated for Nokia SEPs for China and other developing economies, and $1.151 per unit for developed economies.

This ruling has a profound impact in that this is the first time for a Chinese court to make an SEP ruling on royalty rates in the cellular communications industry, imparting global implications, and particularly so in the wake of wide applications of 5G technologies in internet of things, autos and other industries, that can potentially provide a much expanded royalty base for 5G SEP licensing.

While most analysts hail this professionally delivered ruling, there has been some criticism from abroad, particularly regarding the superficial observation of a discounted rate in China. For example, a patent lawyer in New York, Mark Cohen, wrote recently: "Establishing a lower royalty rate for one set of countries as compared to another without a basis in patent law violates China's obligations to provide most favored nation treatment to the party asserting the patents, by providing lower damages in certain countries. Chinese courts should not treat one country more favorably than any other in its courts."