China's SEP case update - ACT v OPPO, Vivo
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The China Supreme People’s Court has published its official version of the OPPO v ACT case on 24 Jan 2024 and ACT v. Vivo on 29 Jan 2024. Although these two cases are China rates/ past damages assessment only, the methodology applies equally to a global rate setting and negotiation steps.
Case Background
On 16 November 2018, the Advanced Codec Technologies, LLC (“ACT”) asserted six SEPs against OPPO and Vivo respectively before the Nanjing Court. ACT sought injunction and damages in the sum of US$ 50 million in total against each company. ACT’s damages claim is calculated based on a per unit rate of US$0.26 and triple punitive damages claim.
The asserted patents were initially owned by VoiceAge Corporation and sub-licensed to Saint Lawrence and then to ACT in respect of AMR-WB.
Result
The determined China rate is $0.008/ unit of handset for the six patents. In the OPPO case, the lump sum is about US$ 2.18m for China sales of the 44 infringing models assessed from Q3 2015 to Q4 2020. In the Vivo case, the lump sum is about US$1.89m for China sales of 59 infringing models sold from Q2 2016 to Q1 2021. In both cases, interests were awarded at 2.125%, calculated from 20 September 2019 onwards for OPPO and from 23 September 2019 onwards for Vivo.
In the OPPO case, the use of 20% uplift by the Nanjing Court as attributable to the implementer’s fault was rejected by the SPC.
The SPC also rejected unpacking using various discounts in both the OPPO and Vivo cases. The range of discounts that ACT asserted as applicable to the other licenses include early signing discount, trade war discounts, patent invalidation risk discounts, settlement discounts.
Methodology
OPPO asserted both comparable licence and top down. Vivo claimed that the royalty base should be the SSPPU and relied on top-down approach.
ACT produced the same comparable licences as evidence in both the OPPO and Vivo cases. The SPC relies on the comparable licence approach but is narrow in the selection.
The numbers disclosed in the SPC judgments are:
