14 October 2026
A business does not need to manufacture phones or computers to encounter telecommunications patents.
Wi-Fi is now built into everything from agricultural sensors and mining equipment to medical devices, appliances, security systems and factory machinery.
For many manufacturers, connectivity is only one feature of the finished product. But that feature may rely on technical standards covered by large portfolios of patents.
A recent agreement between Huawei and HP is a useful reminder of how commercially important those patents can be.
The Huawei and HP agreement
On 26 August 2026, Huawei and HP announced a multiyear global patent cross-licensing agreement.
The agreement includes access for HP to certain Huawei Wi-Fi patents. Although its detailed commercial terms have not been disclosed, it allows the companies to use relevant patented technology without continuing uncertainty over infringement.
The deal follows Huawei’s June 2026 announcement that it would charge a royalty of US$0.50 per unit for consumer-grade devices using its Wi-Fi 7 technology. Huawei said licences could be obtained directly or through patent pools on fair, reasonable and non-discriminatory—or FRAND—terms.
The numbers involved make the point.
Standard-essential patents are not a niche problem limited to disputes between technology giants. They form part of the commercial cost of making and selling connected products.
What is a standard-essential patent?
Technical standards allow products made by different businesses to work together.
Wi-Fi is one example. Others include Bluetooth, mobile communications, video compression, USB and various data and telecommunications standards.
Some of the technology required to comply with those standards is protected by patents.
A patent is described as “standard essential” where implementing the relevant standard necessarily requires use of the patented invention.
In practical terms, a manufacturer may be unable to make a fully compliant product without using patented technology owned by somebody else.
Owners of standard-essential patents commonly undertake to offer licences on FRAND terms.
However, FRAND does not mean free.
A royalty may still be payable, and disputes can arise over:
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whether the patent is genuinely essential;
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which business in the supply chain requires a licence;
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whether an existing supplier licence covers the finished product;
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the appropriate royalty calculation;
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the territories covered by the licence; and
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whether the proposed terms are genuinely fair and non-discriminatory.
These questions can become expensive if they are first considered after a product has entered the market.
Why cross-licensing matters
A cross-licence allows businesses to grant each other access to specified patent rights.
For companies such as Huawei and HP, both sides may hold substantial patent portfolios. Exchanging rights can reduce the risk of litigation and allow each business to continue developing and selling products without repeatedly negotiating around individual patents.
The strength of a company’s own patent portfolio may also give it bargaining power.
A business with no relevant patents of its own may have less to offer in return. It may need to pay for access rather than negotiate a broader exchange of rights.
This is one reason patents can have strategic value beyond the ability to stop a competitor.
They may also support licensing, collaboration, market access and cross-licensing negotiations.
The supply-chain trap
Many Australian and New Zealand manufacturers purchase Wi-Fi modules, chipsets or communications components from third-party suppliers.
That can create an assumption that the supplier has dealt with all relevant patent rights.
Sometimes it has.
Sometimes the supplier’s licence only covers the component itself, particular uses, certain customers or specific territories. In other cases, the patent owner may take the position that a licence is required further down the supply chain.
The position can depend on the patents, contracts, jurisdictions and way the product is supplied.
Buying a compliant component therefore does not automatically answer every licensing question.
Manufacturers should understand:
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which technical standards the product implements;
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which components carry the relevant functionality;
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what patent licences the supplier holds;
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whether those rights extend to the finished product;
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whether the licence applies in every intended market; and
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who bears the risk if a patent claim is made.
A vague statement from a supplier that the component is “fully licensed” may not be enough.
Exporting can change the risk
Patent rights are territorial.
A product that can be sold in Australia without a particular issue may face a different patent landscape in the United States, Europe, China or another export market.
This matters for businesses that initially develop a connected product for the Australian market and only consider international patent risks when export orders arrive.
By then, the product design, price and supply arrangements may already be fixed.
An unexpected royalty can affect margins. A licence dispute can delay market entry. In a more serious case, the business may face infringement proceedings or pressure on distributors and customers.
Patent freedom-to-operate and licensing questions should therefore be considered before international launch—not after the first complaint arrives.
What manufacturers should do
Businesses developing connected products should take several practical steps.
1. Identify the standards being used
Map the communications, interoperability, compression and data standards built into the product.
Do not look only at Wi-Fi. Bluetooth, cellular communications, video and other features may raise similar issues.
2. Check the component supply chain
Ask suppliers what licences cover their components and whether that protection extends to the finished product and its intended markets.
Keep copies of relevant assurances and licence information.
3. Review contractual protection
Supply agreements should address IP warranties, infringement claims, indemnities, cooperation and the consequences if a component can no longer be supplied.
The party best placed to control a risk should not be allowed to leave that risk unaddressed.
4. Allow for royalties in the business model
Licensing costs can affect pricing, margins and investment decisions.
They should be identified before the product is launched or a major supply contract is signed.
5. Consider your own patent position
If the business has developed valuable improvements of its own, patent protection may create more than an enforcement right.
It may provide an asset that can be licensed or used strategically in future commercial negotiations.
The bigger takeaway
The Huawei and HP agreement involved two global technology companies, but the lesson applies much more broadly.
Modern manufacturers increasingly combine their own innovations with standardised technology developed elsewhere.
That creates two separate patent questions:
Can we protect what we have developed?
And:
Do we have the rights needed to use the technology built into the product?
A strong patent strategy must consider both.
Adding connectivity can make a product more useful and commercially valuable. It can also introduce licensing obligations that are easy to overlook when Wi-Fi is treated as just another purchased component.
IP Solved assists businesses with patent strategy, freedom-to-operate reviews, technology agreements and commercialisation. These issues are best considered while the product and supply chain can still be changed.
This article provides general information only and is not legal advice.
