INSIGHTS Ever since the Wi-Fi Alliance officially rebranded the next-generation Wi-Fi technology, 802.11ax, as Wi-Fi 6 in October 2018, the popularity of Wi-Fi 6 has steadily increased both in China and globally. Compared to 5G devices, Wi-Fi 6 devices are primarily deployed in indoor environments, industrials, and some fixed-use locations. With the widespread adoption of Wi-Fi 6 technology, devices that support Wi-Fi 6 technology will become hotly contested products among various interest parties in the following years, and undoubtedly, they will become indispensable key technological components for market share competition among implementers. Licensors will also seize this opportunity to maximize the monetization of their technology.
1.Wi-Fi 6 Adoption in China
While major enterprises have been researching and promoting Wi-Fi 6 for quite some time, its gradual integration into the consumer market in China began around 2020. In May 2020, during the online World Telecommunication and Information Society Day conference, China's three major telecom operators (China Telecom, China Mobile, and China Unicom) held separate press conferences, announcing their concerted efforts to promote new iterations of Wi-Fi 6 in 2020. China Mobile, in particular, aimed to achieve commercial Wi-Fi 6 implementation in June 2020, heralding the Wi-Fi 6 era, targeting around 5 million Wi-Fi 6 users within the same year. However, according to a 2021 brief report on the Chinese Wi-Fi equipment industry, as of 2021, Wi-Fi 4 and Wi-Fi 5 still held a dominant position in the market, with Wi-Fi 5 showing overall growth trends. This trend was especially noticeable in the residential wireless market, where Wi-Fi 4 and Wi-Fi 5 accounted for 85% of the market share.
As per a 2022 report from the China Academy of Information and Communications Technology, two mainland Chinese companies secured positions among the top 10 contributors to Wi-Fi 6 standard proposals: Huawei, ranked second, and ZTE, ranked tenth. Huawei initiated the development of the Wi-Fi 6 standard over a decade ago and maintained a leading position in the number of proposals until the release of the first Wi-Fi 6 draft standard in 2017. Subsequently, Qualcomm escalated its involvement in Standard formulation in 2017, surpassing Huawei in proposal count in 2018 and establishing itself as an industry leader. Regarding patent strategy, Huawei initially pursued licensing negotiations with other entities for its patents and later opted to join the patent pool to monetize its patent value. On December 21, 2021, Buffalo, a Japanese company, and Huawei reached a License agreement under Huawei's Wi-Fi 6 Patents. Shortly after, in July 2022, Huawei joined the Sisvel Wi-Fi 6 patent pool as a founding member.
2.Patent Pool and NPEs: Patent Litigation Originating with Computer Manufacturers
The most prominent Wi-Fi 6 patent pool at present is Sisvel Wi-Fi 6. This patent pool covers over 200 patent families, with Huawei contributing to nearly 60% of these patents (measured by the number of families). Sisvel has currently disclosed a compliant rate of $0.5 per unit for products other than enterprise-level access points. This rate aligns perfectly with the rate set by Huawei for consumer-grade Wi-Fi 6 devices. Given the relatively recent establishment of this patent pool, there have been no reported cases of Sisvel initiating lawsuits against implementers with Wi-Fi 6 patents thus far.
Atlas Global Technologies LLC (Atlas) is another prominent player in the Wi-Fi 6 licensing arena. As a subsidiary of the well-known NPE company, i.e., Acacia, Atlas specializes in managing Wi-Fi 6-related patents acquired from a semiconductor company named Newracom. Atlas holds a portfolio of over 355 patents globally, with over 210 of them granted in the United States, including 149 designated as Wi-Fi 6 Standard Essential Patents (SEPs). Since 2021, Atlas has filed lawsuits against several entities, including HP, Dell, One Plus, TP-Link, Samsung, and D-Link. As of September 14, 2023, the Eastern District of Texas jury rendered a verdict against TP-Link, finding them in infringement of five of Atlas’s patents, resulting in a lump sum payment of $37,481,264. It seems that initial litigation efforts by Wi-Fi 6 licensors are primarily directed toward router and PC manufacturers, given the limited adoption of Wi-Fi 6 technology in the smartphone market. Consequently, there have been relatively fewer lawsuits against mobile phone manufacturers.
AX Wireless Technologies also holds a substantial number of Wi-Fi 6 patents. In July 2022, AX Wireless initiated lawsuits against Dell, HP, and Lenovo based on patents acquired from Applied Transform LLC. In February 2023, AX Wireless launched another lawsuit against Acer. It can be observed that when selecting their initial targets for litigation, AX Wireless's primary consideration was manufacturers primarily focused on computer-related businesses.
From the litigation cases involving Atlas and AX Wireless, it is evident that Wi-Fi 6 licensors primarily focus their attention on computer manufacturers. Product characteristics influence this trend. Unlike phones, computers are more commonly used indoors or in office environments, aligning with Wi-Fi technology's strengths. In contrast, mobile phones rely more heavily on cellular network technology, resulting in a relatively lower demand for patent licensing. Therefore, it is unsurprising that some well-established Chinese computer manufacturers, such as Lenovo, have become the initial targets of Wi-Fi 6 licensors' enforcement actions.
3.Licensors and Implementers: High License Fees and Potential Market Demand
With the proliferation of Wi-Fi 6 devices and the growth in market demand, enterprises possessing relevant patents will have more opportunities to realize the value of their patents. The application of Wi-Fi 6 technology is expanding in various scenarios, including industrial areas, enterprises, and smart homes, providing licensors with diversified market space. As the promotion of Wi-Fi 6 in regions like China continues, the competition for market share will intensify, leading enterprises to actively seek patent licensing and collaboration to realize patent value. The emergence of Wi-Fi 6 patent pools will provide patent holders with a more convenient licensing pathway while establishing reasonable rates, aiding in expediting the monetization process. The active participation of NPEs will further increase market competition, fostering more patent licensing and litigation activities. The future monetization of Wi-Fi 6 patents is expected to flourish, with patent holders poised to gain substantial returns from this technological wave.
However, many implementers are concerned that early adoption of Wi-Fi 6 technology might increase their financial burden without yielding corresponding returns in the short term. The high licensing cost has left numerous companies hesitant, preferring to wait for more mature and cost-effective solutions. This cautious approach has also slowed the adoption of Wi-Fi 6 technology in some companies' product lines. Companies need to balance market demand with the feasibility of technical investments to ensure a sound economic outcome in applying new technology. Nevertheless, as time progresses and with the gradual maturation and cost reduction of Wi-Fi 6 technology, many companies will dynamically adjust their stance to balance patent expenses and consumer demand, maintaining a competitive edge in the fiercely competitive market.
Author: Xinran Zhao
Xinran specializes in patent technology analysis and patent licensing negotiations in electronic communications. She previously worked at a patent law firm in Japan and a Fortune Global 500 Japanese corporation handling patent applications, patent invalidation, and patent infringement analysis. She has assisted clients in conducting patent landscape analysis of target companies on multiple occasions. Xinran holds a Master's in Intellectual Property Management from the National University of Singapore and a Bachelor's in Network Engineering and Intellectual Property from the Nanjing University of Science and Technology. Contact Xinran at xinran.zhao@purplevineip.com.
References:
[2] https://pdf.dfcfw.com/pdf/H3_AP202005191379926510_1.PDF
[3] https://pdf.dfcfw.com/pdf/H3_AP202112161534896995_1.pdf?1639664124000.pdf
[4] https://atlasglobaltechnologies.com/
[6] https://www.huawei.com/en/news/2021/12/buffalo-huawei-wi-fi-6-licence-patents
[7] https://www.sisvel.com/licensing-programmes/Wi-Fi/wifi-6/
