Huawei and Qualcomm recalculate their patent-related accounts

In 2025, the English journal Science of Law Journal, Volume 4, Issue 5, published the paper Implementation Dilemma of the FRAND Principle in Standard-Essential Patent Licensing and Reflections on China's Path (Chinese reference translation) written by Yu Nanfen, whose affiliation is Qualcomm Communication Technologies (Shenzhen) Co., Ltd. A key question raised in the article is: Chinese enterprises are not only users of standard-essential patents, but also increasingly important patent exporters. How can they establish a balance of interests between these two identities?[1]

This is also a key to understanding the latest transaction between Huawei and Qualcomm.

On October 5, 2026, the two companies announced that they have reached a multi-year cross-patent licensing agreement covering technology fields including 5G, computing, artificial intelligence and networks; Qualcomm will also purchase part of Huawei's U.S. patents in the fields of computing, artificial intelligence, networks and other technology fields. According to the announcement, the transaction will be completed after obtaining necessary regulatory approvals.[2]

What price does one company need to pay to use another company's technology; and what returns can one company get when its technology is recognized by another — these two accounts are now placed on the same negotiation table.

Yu Nanfen's career change adds a narrative touch to this matter, but what is really worth analyzing is how the R&D achievements of Chinese enterprises enter the global patent transaction, and how traditional licensing enterprises reassess the value of Chinese enterprises.

01

Patent Licensing Is Never Merely a Technical Account

Yu Nanfen once stood on the other side of this interest dispute. In 2019, the opening statement of the U.S. Federal Trade Commission v. Qualcomm case cited her testimony during her tenure at Huawei: if the CDMA licensing agreement was not extended, Qualcomm might stop supplying chips, which would affect Huawei's business. At that time, one of the focuses of the dispute was whether the relationship between chip supply and patent licensing put terminal enterprises at a disadvantage in negotiations. However, in August 2020, the U.S. Court of Appeals for the Ninth Circuit revoked the first-instance antitrust judgment and the related permanent injunction in this case.[3]

This piece of history shows that patent licensing is never only about calculating technical contributions. Supply relationships, alternative solutions, litigation costs and the ability of enterprises to bear risks will all affect the negotiation.

But Huawei has long been far more than the party that pays licensing fees. In July 2020, when Huawei announced that it had reached a new patent licensing agreement with Qualcomm, it made it clear that Qualcomm had also obtained part of Huawei's patent licenses. Therefore, today's transaction should be understood as a further adjustment of the rights relationship between the two sides, rather than Huawei's first entry into two-way licensing.[4]

02

Products, Licensing and Trading: Three Conditional Deals

There is another detail that is more explanatory than the narrative of "former rivals shaking hands".

Qualcomm's 2025 fiscal year annual report disclosed that the U.S. Department of Commerce revoked its export license for selling 4G and some other chips to Huawei in May 2024, so Qualcomm expected that it would no longer get product revenue from Huawei. The same annual report also disclosed that due to the expiration of Huawei's original patent licensing agreement, starting from the second quarter of fiscal year 2025, Qualcomm's licensing business revenue no longer includes Huawei's patent royalties.[5]

Product sales, patent licensing and patent trading are three interrelated deals with respective conditions.

Qualcomm can compete with Huawei in the product market, hope to maintain the licensing relationship with Huawei, and also purchase Huawei's patent assets. Huawei can also develop its own chip and technology system, while handling the cost of using other people's patents through transactions and realizing the value of its own patents.

Enterprise relations are composed of specific interests. A conflict in one business does not mean that another transaction loses its foundation. The new patent agreement cannot be interpreted as the chip supply restrictions have been lifted.

03

What Is the Difference Between Cross-Licensing and Patent Purchase

In this transaction, the difference between cross-licensing and patent purchase is worthy of attention.

Cross-licensing first solves the problem that both parties use each other's patents within the agreed scope. When the businesses of two enterprises involve connection, computing and AI at the same time, the more technical overlaps there are, the higher the cost of clearing patent risks item by item will be. A multi-year, cross-field licensing arrangement can improve the predictability of operation, making it easier for enterprises to plan R&D, product and market investment.

This certainty itself has commercial value. What enterprises get may be licensing revenue, or space to reduce disputes, or a combination of both. Cross-licensing does not automatically mean no payment from either party, and the actual consideration still depends on the patent portfolios, business scale and contractual arrangements of both parties.

Patent purchase further involves the transfer of ownership.

Obtaining a use license mainly answers the question of "can I use it"; obtaining patent ownership also involves who can license others, dispose of assets and claim rights. Of course, these capabilities are still restricted by conditions such as existing licenses, contractual agreements and patent validity.

Therefore, from the perspective of commercial mechanism, Qualcomm's purchase of part of Huawei's U.S. patents may serve both the risk management of its own business and the supplement of its patent portfolio. Huawei, on the other hand, obtains a channel to realize asset value outside of self-licensing. Of course, since the patent list, price and follow-up arrangements have not been made public, it is impossible to judge how these assets will be used specifically at present.

But one direction is clear: the rights formed by the R&D of Chinese enterprises can become assets that international patent operators actively evaluate and purchase.

04

Making Patents Tradable Requires Another Set of Capabilities

The significance of this to Chinese enterprises is far deeper than "signing another big agreement".

When a product enters a certain market, it usually requires supply chains, sales channels, certification and customer support; when patents enter transactions, another set of capabilities is needed: clear ownership, effective regional layout, claims that can withstand challenges, and provable technical and commercial value.

The two capabilities can support each other and also play their respective roles. If an enterprise's product business in a certain market is restricted, it does not mean that all the patents it owns locally lose value. As long as the relevant rights are valid, useful and meet the conditions for compliant transactions, they can still become the objects of licensing, cross-licensing or sale.

This changes the standards for enterprises to manage patents.

In the past, some enterprises cared more about how many patents they applied for and how many were granted. At the stage of entering transactions, they must also answer: Who needs these patents, what products do they cover, what costs can they help the other party reduce, and what can they get in return?

The same patent, held by the original right holder, may be mainly used to protect products; after entering the portfolio of another enterprise, it may generate new uses due to different customers, technology coverage and operating capabilities. The value of patents comes not only from the invention itself, but also from how the holder organizes and uses the rights.

05

Overseas Licensors Also Need to Update Their Negotiation Methods

For overseas enterprises that want to develop licensing business in China, this also means that the negotiation methods need to be updated.

Chinese enterprises are still important technology users, but more and more of them also have patent assets worthy of evaluation. Overseas licensors need to examine the sales volume of their customers, as well as the R&D achievements of their customers; they need to prove their own technical contributions, and also identify what the other party can provide.

As a result, negotiations can accommodate more arrangements: one-way licensing, cross-licensing, asset purchase, and rights allocation of different scopes and durations. The more solid the technology accumulation of Chinese enterprises is, the more likely the negotiation will shift from discussing payment capacity to discussing the contributions of both parties.

This does not guarantee that every Chinese enterprise can get the same result as Huawei. What can enter the negotiation are specific, valid and commercially related rights. The number of patents can show the scale of investment, but cannot replace the proof of the value of rights.

06

Back to FRAND: The Same Set of Principles Connects Two Roles

A useful patent analysis should be able to connect rights and business: which rights cover the target market, which can support negotiations, which are suitable for retention, and which can be sold; after the transaction, what kind of use space the enterprise still retains, and what obligations it undertakes.

Back to the FRAND principle discussed in Yu Nanfen's paper, fairness, reasonableness and non-discrimination are not a ready-made price list. Its value lies in enabling right holders to obtain reasonable returns, and enabling technology users to enter the market under predictable conditions.

Since Chinese enterprises assume both roles at the same time, they need licensing rules that can be interpreted, compared and tested. The demand for reasonable fees when acting as a user, and the demand for recognition of contributions when acting as a right holder, should be connected by the same set of principles.

The latest transaction between Huawei and Qualcomm provides a sample worthy of observation: the competition of enterprises in the product market can coexist with the transaction in the patent market; the assets formed by continuous R&D can also change the content of negotiations between the two sides.

The next stage of Chinese enterprises' intellectual property capabilities should be reflected in this change — being able to clearly state what they have used, what they have contributed, and what kind of returns these contributions deserve.

References

[1] Yu Nanfen, Implementation Dilemma of the FRAND Principle in Standard-Essential Patent Licensing and Reflections on China's Path, Science of Law Journal Volume 4, Issue 5, Clausius Scientific Press https://clausiuspress.com/assets/default/article/2025/11/01/article_1762051570.pdf

[2] Qualcomm, Huawei and Qualcomm Announce Broad Patent License Agreement, October 2026 https://www.qualcomm.com/news/releases/2026/10/huawei-and-qualcomm-announce-broad-patent-license-agreement

[3] U.S. Federal Trade Commission (FTC), Opening Statement Materials for FTC v. Qualcomm, January 2019 https://www.ftc.gov/system/files/documents/cases/2019_01_04_ftc_opening_slides.pdf

[4] Huawei, Huawei and Qualcomm Reach Patent Licensing Agreement, July 2020 https://www.huawei.com/cn/news/2020/7/huawei-qualcomm-ip-agreement

[5] Qualcomm Fiscal Year 2025 Annual Report (Form 10-K), U.S. Securities and Exchange Commission (SEC) https://www.sec.gov/Archives/edgar/data/804328/000080432825000085/qcom-20250928.htm

This article is from the WeChat official account "Zhichanli" (ID: zhichanli), Author: Shawn/MCP, published with authorization from 36Kr.