Chinese Gear Makers Huawei, ZTE Locked in IP Showdown

In a surprise attack against a fellow Chinese telecom, Huawei filed IP-violation suits against ZTE this morning in Germany, France and Hungary. Huawei is accusing the rival equipment vendor of violating several patents relating to its data card and Long Term Evolution (LTE) 4G wireless networking technologies. The company also claims ZTE has been illegally using a Huawei-registered trademark on some of its data card products.

Huawei claims the suits were a last resort, filed only after ZTE failed to respond to cease and desist letters, and refused to come to the table for cross-patent licensing negotiations.

As Huawei has neither received any substantive response nor a commitment from ZTE to stop its infringements, the company has had no alternative but to use legal means to protect its legal interests by requesting that the courts prohibit ZTEs continued infringements of Huaweis trade mark and patent rights, the company said in a statement.

Huawei used this drawing to illustrate the ZTE infringement.

Meanwhile, ZTE responded to the paperwork with indignation, and surprise.

ZTE Corporation is astonished that Huawei Technologies has taken these legal actions. As a company listed on the Hong Kong stock exchange, ZTE respects and adheres to international intellectual property laws and regulations without reservation, and absolutely rejects that there has been any patent and trademark infringement. ZTE is always willing to negotiate on issues in good faith, but will definitely take vigorous legal action in situations like this to protect its interests and those of its customers worldwide.

Both Huawei and ZTE have experienced steady growth in the last few years selling cheaper telecommunications gear for both wired and wireless net! works to developing and more recently, first-world countries. Huawei, in particular has been trying to move up market and shed its image as a low-end supplier with questionable IP practices, itself. Huaweis move to defend its IP is likely part of a continuing emphasis it is placing on the value of its intellectual property.

But it may also be designed to assure Western countries worried about Huaweis Chinese origins that it respects IP rights unilaterally. The suit also puts big telecom equipment vendors such as Ericsson, Alcatel-Lucent and Nokia Siemens Networks on notice that Huawei believes it has some essential and valuable patents associated with LTE. This may force other vendors as well as handset makers into negotiations with Huawei.

Its the latest move in Huaweis somewhat ironic lawsuit blitz. In January, the company sued Motorola Solutions from selling its wireless network business to Nokia Siemens Networks, because the sale would transfer trade secrets and competitive intelligence from the Chinese equipment firm to its competitor. Huawei and Motorola ended up settling their differences out of court.

Huawei said it filed these lawsuits as part of a broader effort to protect its intellectual property around the world. The company, which holds more than 49,000 patents, also carefully pointed out in its release on this lawsuit that it currently pays $222 million a year to other companies for cross licensing agreements. I imagine now, its ready to get a little something of that back, and this represents its initial steps.

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