Reborn since 1993

Chapter 1179 Sowing Discord and Shifting the Blame East

"Currently, domestic appliance manufacturers such as BBK, Panda, Kejian, UTStarcom, Bird, and even Haier all want to obtain MP3 patent licenses!"

Gao Zhiyuan, manager of the legal department of Dongling High-Tech, said to Li Dongling that these domestic companies had come to try to obtain the patent as early as after the release of Feiyan MP3, but Feiyan Technology had been negotiating with other companies, which was actually a delaying tactic.

Because Feiyan MP3's patents are unique, they are not held by Feiyan Technology itself, but by its parent company, Dongling Hi-Tech!

This is not to guard against Feiyan Technology, but because Feiyan Technology is listed on Nasdaq and has many Wall Street institutions as shareholders.

To avoid the risk of inviting trouble, and to prevent Feiyan Technology from being "snatched away" by some powerful figures in America one day, just like Alstom was snatched from France, Dongling High-Tech must take some preventative and countermeasure measures.

These measures include acquiring the core patents of Feiyan MP3 players, Feiyan Dolphin radios, Feiyan car audio systems, and other equipment from Dongling Hi-Tech. In addition, Dongling Hi-Tech is also used for sales channels, advertising channels, and after-sales service.

If nothing happens, then everything is fine. Feiyan Technology is Dongling Hi-Tech's offspring. Dongling Hi-Tech licenses MP3 and other patents to Feiyan Technology at a bargain price every year.

But if Feiyan Technology causes trouble and starts to break off relations, then sorry, Feiyan Technology will have to pay for patent fees, channel fees, after-sales service, etc., and will also have to make up for the expenses incurred in previous years.

Dongling High-Tech has plenty of ways to completely drain and squeeze Feiyan Technology dry, in a reasonable, legal, and compliant manner. If you want to take Feiyan Technology away, you won't get a single hair and will end up with a mountain of debt!
"Not only domestic companies, but also overseas companies like Toshiba, Sharp, Samsung, and LG, as well as technology companies in Taiwan and Singapore."

Companies like Diamond and Apple from Europe and America have also sent agreements to Feiyan Technology, seeking to obtain MP3 patent licenses!

Fu Cheng, the general manager of Feiyan Technology, who also arrived with him, reported to Li Dongling.

Hearing Fu Cheng's words, Gao Zhiyuan felt even more overwhelmed. So many companies wanted to obtain MP3 patent licenses, but how could all the patents be given away?

Especially when it comes to overseas matters, patent fees are even harder to collect, and there are just too many international lawsuits and disputes.

Even now, his legal department has become known in some people as the invincible force in Hanxi and the unrivaled force in Pingyang. With its reward system, it has cultivated an elite team of lawyers. Anyone who gets targeted by Dongling High-Tech's legal department will suffer greatly!
But now there are just too many companies that want to obtain MP3 patents, and there are even more that want to get the patents for free without spending any money!
With so many lawsuits, including those overseas, if Dongling High-Tech's legal department were to fight them one by one, who knows how long it would take.

Li Dongling rubbed his temples as he listened to Fu Cheng and Gao Zhiyuan's reports.

With the booming sales of Patriot MP3 players, MP3 players have become a new hot trend in the technology industry, and everyone wants a piece of the pie.

However, this is only natural. With the MP3 market about to boom, who wouldn't want to take a bite if given the chance?
The previous HPS phone boom gave rise to a number of domestic mobile phone "giants" such as Xiaolingtong, UTStarcom, Amoi, and Bird.

Among them, Xiaolingtong was sold to Japan Telephone and Telegraph Company for more than 10 billion US dollars.

Meanwhile, UTStarcom, ranked second, also succeeded. As the second largest mobile phone manufacturer in mainland China, it completed its listing on Nasdaq with a valuation of $450 million. On the first day, its market value once exceeded $3 billion, which made SoftBank and other companies that invested in UTStarcom a fortune.

In fact, when Starcom went public in its previous life, it was even more frenzied, with its market value once exceeding seven billion US dollars on the day of its listing.

Now, due to its status as the perennial runner-up in the mainland mobile phone market, its market value has been halved.

Regardless of whether UTStarcom's market value has shrunk, it proves one thing: following Dongling Hi-Tech can bring profits!

Previously, when Dongling High-Tech pioneered the era of PHS (Personal Handyphone System), UTStarcom was the first to obtain patents from Dongling High-Tech, although they signed a stringent agreement, such as paying patent fees based on shipment volume and sourcing parts from Dongling High-Tech's parts supply chain.

But now UTStarcom's listing has proven everything. No matter how harsh the conditions for Dongling Hi-Tech are, they can still make a profit.

Which company doesn't want to go public, especially on NASDAQ? The founder can achieve financial freedom overnight, getting money, cars, women, private jets, yachts, and more!

With UTStarcom as an example, now it's MP3's turn. How can other companies stand by and watch?

"How many MP3 patents does Dongling Hi-Tech currently hold?" Li Dongling thought for a moment and then asked Chen Tao, the general manager of the technology department, who was present.

Upon hearing this, Chen Tao immediately replied, "We currently hold more than 200 MP3 patents, all of which have been applied for registration in China, South Korea, Japan, Singapore, America, and Europe."

The core patents include twenty-five items such as MP3 encoding and decoding algorithms, MP3 digital playback engine technology, high-efficiency compression patents, and user interface patents.

A significant portion of the more than two hundred patents mentioned by Chen Tao are part of a patent wall, established to protect core patents.

The main strategy is to take a shot first, regardless of whether the patents are useful or not. It doesn't matter if we can't use them ourselves, but we can't let our competitors use them!

After a pause, Li Dongling said, "Let's establish an international music foundation and put all the MP3 patents held by Dongling High-Tech into this foundation."

"Anyone who wants to produce MP3 music players should apply for a patent with the MP3 Music Foundation!" Li Dongling planned to first "extract" Dongling High-Tech from the vortex.

Currently, countless technology companies around the world are eyeing the MP3 music player market, which means they are all competitors of Dongling Hi-Tech. If Dongling Hi-Tech refuses to license its patents to them or collect patent fees, it will become a competitor of the entire industry and may be attacked by them.

Now that the patent has been transferred out, even if everyone knows that the so-called International Music Foundation is just a front for Dongling Hi-Tech, as long as Dongling Hi-Tech doesn't admit it, then it can't be blamed on Dongling Hi-Tech.

Even if the International Music Foundation collects patent fees in the future, or sues other companies because of patents, it will have nothing to do with Dongling High-Tech. They will just deny any connection between the two parties.

Now you can go ahead and do it with confidence!

"Those companies want MP3 patent licenses? Then give them those!"

Li Dongling said something unexpected, and Fu Cheng couldn't help but move his lips upon hearing it.

Fu Cheng could understand why Aigo licensed its MP3 patent to them at a bargain price, since they were all "family." Aigo was also a lackey of Dongling High-Tech, so even if things went wrong, they were still in the same boat.

If the license is granted to other companies, wouldn't that just create enemies for Feiyan Technology and let them steal Feiyan MP3's market share?
"However, to obtain a patent, whether it's an MP3 manufacturer, a computer manufacturer, or even a chip decoder manufacturer, anyone using an MP3 patent has to pay patent fees to the International Music Foundation!"

"For those who are unwilling to pay, the Ministry of Justice will pursue legal action until they agree."

The Ministry of Justice can collaborate with law firms around the world to help win patent lawsuits, ban the sale of MP3s that infringe on the International Music Foundation's patents in their respective countries, and seek huge damages in court.

The compensation received can be split among local law firms, with 30%, 40%, or even half going to them!

Li Dongling said that those companies that dare to infringe on patents are just relying on their large numbers and the fact that the authorities are far away, thinking that Dongling High-Tech can't deal with them and that lawsuits take too long.

But there's always someone who can subdue another. Dongling High-Tech's legal department directly contacted the major local law firms where those companies were located and asked them to deal with them. As long as the compensation was in place, these law firms had all sorts of ways to torment the other party.

"Different patent fee strategies should be adopted for different companies."

For computer manufacturers, MP3 music playback isn't their primary function, so they charge $0.6 per unit. For companies like Compaq and Dell, which ship over ten million units annually, the patent fee can be further reduced—as long as they pay!

"As for MP3 players or mobile phones that will support MP3 functionality in the future, a patent fee of US$2.5 per unit will be charged for annual shipments of less than 100,000 units."

For annual sales of more than 100,000 units but less than one million units, a fee of US$1.50 per unit will be charged.

For annual sales exceeding one million units, a patent fee of $1 per unit will be charged.

"In addition, we must also be discerning about the manufacturers that license patents. For example, we cannot license to companies like Sony, Samsung, and Apple. We must keep a close eye on these companies and sue them immediately if they infringe on our patents!"
Another approach is to make an example of them, first targeting a few small manufacturers who dare to infringe on MP3 patents, letting them know that this isn't child's play!

Hearing Li Dongling's words, Gao Zhiyuan suddenly felt enlightened. The great philanthropist Li had used various methods, such as shifting the blame eastward, winning people over and dividing them, making an example of someone to warn others, and sowing discord.

The most important purpose of these methods is to divide and split the aggressive competitors who want to obtain MP3 patents into different camps.

What troubled Gao Zhiyuan before was that there were too many opponents. Even if a tiger wanted to eat the sky, there was no way to start.

However, through this horizontal and vertical division, music players and computers that utilize MP3 patents were first divided into two camps.

They also separated MP3 manufacturers from small workshops, medium-sized companies, and large technology companies.

Different people have different interests, making it difficult for them to unite and put pressure on Dongling High-Tech.

The next step is to first crush the small workshops that dare to produce MP3s without paying patent fees, and then keep an eye on giant companies like Sony, Samsung, and Apple. By targeting them, we can claim huge amounts of patent damages!

By using patents to suppress these giant companies and prevent them from affecting Feiyan MP3's high-end brand status, the company can then force small and medium-sized manufacturers to compete and pay Dongling Hi-Tech MP3 "taxes".

This was a last resort, as MP3 players were extremely profitable. In my previous life, there were hundreds of MP3 manufacturers, large and small, emerging domestically, not to mention those overseas.

Trying to stop them from producing MP3s by not licensing patents is nonsense; some other means will definitely be needed.

　Sorry for the late update today. I had some things to take care of. Please forgive me.

　　
　
(End of this chapter)