Patent War Resumes, Coolpad Sues South Korea NPE Pantech for Royalty Rates

Coolpad files a lawsuit for determination of royalty rates in China

Recently, it is learned from public inquiry that Yulong Computer Communication Technology (Shenzhen) Co., Ltd. (hereinafter referred to as Coolpad) filed a lawsuit against Pantech Corporation (hereinafter referred to as “Pantech”) with the Shenzhen Intermediate People’s Court for the royalty rates of global standard essential patents (SEPs). It can be learned from the public inquiry about the lawsuit history between Coolpad and Pantech that in May 2021, Pantech filed a patent infringement lawsuit against the Chinese communications manufacturer Coolpad with the United States District Court for the Eastern District of Texas, accusing Coolpad-branded mobile phones and other Coolpad-branded communications products of infringing upon its patent rights. Therefore, it is speculated that this move is Coolpad’s counter-attack against Pantech’s lawsuit in the United States.

Background of the defendant Pantech

Originally as an electronic communications manufacturer headquartered in South Korea, Pantech is one of the early smartphone brands, having its products once also sold in the Chinese market. However, after several acquisitions and reorganizations, it has currently given up its mobile phone business and transformed into an NPE.

According to the US Patent Litigation Database statistics, Pantech has initiated a total of five patent infringement lawsuits since 2021, against mobile communications manufacturers such as ASUS and BLU in addition to Coolpad. Pantech has generously disclosed on its official website that it has carried out a patent income-oriented project【1】, hyped its “victories” in the lawsuits against mobile communications manufacturers, including suing ASUS, reaching a reconciliation agreement with BLU, and others, and indicated that it hoped to occupy a favorable position【2】in negotiations with other manufacturers by virtue of the license agreement reached and concluded with BLU.

Return of Coolpad

As one of the former members of “China Cool Alliance”, Coolpad returned to the Chinese market at the end of 2020 after many years of “silence”. It is learned from public sources that Coolpad has rebuilt its operation and management team.

Since its return, Coolpad has released two new products, COOL 20 and COOL 20 pro, both of which are supported with the Coolpad’s self-developed system COOLOS and the EROFS super file system. According to insiders, Coolpad’s R&D personnel have contributed two EROFS ecological features, which have been integrated into the mainline of Android and Linux, and Coolpad’s core branch code contribution in the Linux core community has now ranked top 2 among Chinese mobile phone brands. Coolpad has accumulated more than 10,000 patent applications in the field of communications and more than 900 patents in the field of 5G, with a number of technologies having broken the monopoly of international giants.

NPE litigation brings huge litigation burden to Chinese enterprises

According to the data released by the U.S. Lexis Law News Database, the NPE patent litigations in the U.S. increased by 11% in 2021, with Chinese communications companies remaining as the chief target of NPE litigation. Such NPE litigation takes aim at unreasonable royalties, which has brought a great litigation burden to patent exploitation manufacturers including Coolpad.【3】

Different from passive response, this time Coolpad chose to file a counter-attack lawsuit against Pantech with the Chinese court. Since the Huawei v. Conversant case, Chinese companies have successively taken the initiative to defend for their legitimate rights and interests, and have filed lawsuits for determination of royalty rates to protect their own interests. This move is not only a counterattack made by a Chinese company for the purpose of safeguarding its legitimate rights and interests as a SEP licensee, but also another stern warning to such NPEs who attempt in vain to coerce Chinese communications manufacturers to pay unreasonable royalties through overseas litigation.

Note:

[1]Information source: Pantech’s official website (http://www.pantech.com/news)

[2]Information source: https://www.etnews.com/20211015000123

[3]Information source: law360