5G in China: could it strengthen NPEs?

25 August 2020

5G in China: could it strengthen NPEs?

With Shenzhen becoming the first city in China to have full 5G deployment and other 5G-related developments in the country rolling at full speed, the IP community will be seeing intensified activity. Non-practicing entities (NPEs) may not be far behind.

In mid-August, the modern metropolis in Guangdong Province dubbed as China’s Silicon Valley, completed its 5G network deployment to officially became the first Chinese city to realize full-blown 5G wireless networking.

A coastal city, Shenzhen has over 12.5 million residents. It boasts of numerous theme parks, beaches, some of the tallest buildings in the world and other attractions. It is home to over 14,000 technology enterprises including global brands Huawei, Lenovo, smartphone maker ZTE, gaming firm Tencent and drone maker DJI. Shenzhen is also a center for innovation, giving birth to a wave of tech startups.

5G at full scale in the city will promote further innovation and the emergence of 5G industries.

Global Times reported that by the end of the second week of August, the city had installed over 46,000 5G base stations, putting Shenzhen on equal footing with Europe as far as 5G deployment is concerned.

Elsewhere around China, things are also happening fast.

Capital city Beijing had put up 5,135 base station during the first half of 2020. By June, the number had increased to 22,500 base stations.

Shanghai expects 30,000 outdoor base stations and 50,000 indoor small stations completed by the end of the year.

“I believe the Chinese government is really pushing the implementation of 5G throughout China which inevitably boosts up the filing and enforcement of 5G -related patent applications,” said Stephen Yang, managing partner and patent attorney at IP March in Beijing.

Yang believes that with 5G, the country will become a hotspot of IP issues. These include litigation, SEPs, patent pooling and others.

Still another issue that may emerge and become less low-key is the one concerning non-practicing entities (NPEs).

NPEs are individuals or business entities with patent rights for an invention. Yet, developing this invention is not in their pipeline. They don’t sell or manufacture products or processes. However, they brandish their patents in front of an alleged infringing individual or business entity, seek injunctions and huge damages from these parties. Sometimes, an NPE files lawsuits when there is an IPO.

NPEs exist in the United States. Now, their lot is growing in China and getting more active. Unfortunately, the issue has not caught enough attention in the country.

“With China strengthening IP protection and permanent injunction being an assumed remedy for the plaintiff winning an IP litigation, I expect NPEs may become more aggressive which may in turn change the court practice in some ways,” said Yang.

“Currently if a plaintiff wins an IP infringement case, it will get permanent Injunction, unless for public interest purposes in which case the infringers may still use the patented invention but have to pay the plaintiff, according to a judicial interpretation. So permanent injunction can be assumed in an IP infringement case. However, if NPEs abuse this practice and force the alleged infringers to avoid injunction by taking licenses, the court may take a different view on granting permanent injunction on almost all cases,” Yang explained.

“There are Chinese companies like Huawei, ZTE that are leaders in 5G technology. It will be interesting to see how Chinese courts proceed with Chinese companies as plaintiff or defendants,” he added. 

According to the Global Times, a report by the China Academy of Information and Communications Technology said that more than 410,000 5G base stations had been set up around the country by the end of June. China will deploy 500,000 more by the end of the year.

By the end of July, more than 88 million people in China were using 5G, putting the country in the top spot for 5G usage around the world.


Espie Angelica A. de Leon

Law firms

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