- HP joins Amazon, Apple, Qualcomm, Samsung, Ericsson and Nokia in licensing or cross-licensing Huawei intellectual property
- U.S. sanctions can remove Huawei hardware from networks, but they can't remove Huawei inventions embedded in global technology standards
- America helped turn patents into weapons of technological competition. Huawei has learned to play the same game
The announcement last week of an IP licensing agreement between HP and Huawei is significant, but perhaps not for the reason most people imagine.
The deal is best understood as evidence of a central paradox in America’s technology conflict with Huawei. The U.S. can remove Huawei equipment from networks, pressure others to do the same, restrict its access to semiconductors and exclude it from supply chains, but Huawei and its technology remain deeply embedded in the intellectual-property layer of global communications standards—and its position there is actually getting stronger.
One of the most remarkable things about the deal between Huawei and HP is how unremarkable it is. Other companies that already have patent licensing or cross-licensing agreements with Huawei include HPE, which is now a completely separate business from HP, as well as Amazon/AWS, Apple, Qualcomm, AT&T, Samsung, Ericsson and Nokia—and dozens of other Fortune Global 500 companies.
The extent of these deals provides a rare window into one of the most essential parts of the global communications industry—and one of the least publicised.
The communications industry's intellectual-property sector and its associated patents are the invisible foundation underpinning everything that goes into building the world's new AI-enabled digital economy. It is what ensures that the best technology can be made broadly available while providing a framework for companies that invent it to be compensated for doing so.
And the IP ecosystem has its own unique culture. The parts of it occupied by companies like Ericsson, Nokia, Samsung, Huawei and others—excluding the patent trolls—are, by and large, a peaceable kingdom compared with the commercial and geopolitical layers swirling around them.
Intellectual-property professionals tend to be, well... intellectual. By and large, they are pleasant to each other. The atmosphere is often collegial, even collaborative. When disputes arise, there are established systems to mediate and resolve them, culminating in deals like the one announced last week.
All of which makes HP's response to Huawei's announcement of the deal even more graceless.
“This is an all-too-common issue facing American technology companies. When standard-essential patent owners like Huawei sue companies with standards-compliant products, American companies often have no choice but to enter into licenses in exchange for the ability to continue serving customers.”
Oh, boo hoo.
An American company having to adhere to the same legal framework as every other country and company in the world? Outrageous. Surely something can be done to save this poor, feeble $60 billion megacorp from being victimised.
HP's own history as both a prolific patent enforcer and an infringer makes its indignation over Huawei's patent enforcement all the more embarrassing. In 2008, a U.S. federal jury found Hewlett-Packard had infringed a Cornell University microprocessor patent and awarded Cornell $184 million in damages, later reduced substantially.
But there is a much bigger irony here.
Over the past several decades, the U.S. tech industry itself has helped morph patents from a mechanism primarily designed to protect and disseminate invention into something more aggressive. Giant companies accumulate vast libraries of patents not simply because they intend to commercialise every invention, but to surround technological territory, deter competitors, force cross-licensing agreements and defend themselves against other companies doing exactly the same thing.
Google's $12.5 billion acquisition of Motorola Mobility and its enormous patent portfolio was one spectacular example. Another was the $4.5 billion purchase by a consortium including Apple and Microsoft of thousands of Nortel patents.
The original spirit of patents was essentially: disclose your invention, receive temporary protection and ultimately allow society to benefit from it—and make some cheddar along the way.
The modern technology patent war can look considerably more like mutually assured destruction.
Hey, you started it
Huawei did not suddenly decide to become more aggressive about monetising its enormous patent portfolio. It did so in response to Washington’s attacks on the company's ability to make money in almost every other part of the technology stack. U.S. sanctions restricted Huawei's access to American technology, severed it from advanced semiconductor manufacturing and helped exclude its equipment from networks and markets around the world.
Huawei responded in part by moving harder into an area Washington couldn't easily blockade: intellectual property.
The result has been a classic self-own. American technology companies spent decades amassing enormous patent portfolios and insisting that competitors pay for intellectual property they use. Huawei has now become the gold medal winner in the same game.
And unlike a base station or router, intellectual property embedded in global standards cannot simply be ripped out of a network and replaced. Once patented technology becomes part of the machinery of Wi-Fi, cellular and other communications standards, sanctions have much less power to make it disappear.
That is what makes the HP agreement so important.
It isn't evidence that Huawei has somehow slipped through America's sanctions regime. Nor does it mean HP has suddenly embraced Huawei as a technology partner. It demonstrates something much more intriguing.
America helped turn patents into weapons of technological competition. The problem for Washington is that Huawei now owns one of the biggest arsenals.
And HP, like everyone else, has to pay to use it. For the sake of its self-respect—and America's image on the wider world stage—it would be better if they accepted the outcome more graciously.