China's Huawei files lawsuit aganist rival ZTE

Both Huawei and ZTE are major producers of telecommunications network equipment

China's largest telecommunications equipment supplier, Huawei, has filed lawsuits against Chinese rival ZTE for patent infringement involving mobile technologies.

The lawsuits, filed in France, Germany and Hungary, accuse ZTE of infringing on a series of Huawei's patents relating to mobile broadband data cards and higher-speed fourth generation network technology known as LTE (Long Term Evolution). The lawsuits also allege that ZTE illegally used the Huawei's trademarks on some of its data card products.

Huawei's chief legal officer, Song Liuping, said in an interview that the company had begun sending ZTE cease and desist orders from last year, with the latest one being sent only some days ago. Huawei is still calculating the cost of the damages, but Song said it will exceed tens of millions of dollars.

Huawei is also investigating other countries to see if ZTE has infringed any another patents and trademarks. ZTE has yet to initiate talks with Huawei, Song said.

ZTE responded to lawsuit and said the company is "astonished" that Huawei has taken these legal actions, and rejected the accusations of 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," the company said in a statement.

Both Huawei and ZTE are based in the Chinese city of Shenzhen, and are producers of telecommunications network equipment, handsets and tablets. Both companies earn most of their revenues overseas. In the case of Huawei, about two-thirds of sales revenue came outside of China, whereas for ZTE it was just over 54 percent.

In 2010, Huawei's sales revenues reached 185.2 billion yuan (US$28.5 billion). ZTE's revenues reached 70.3 billion yuan ($10.8 billion).

Europe represents a big market for the two companies as countries in the region move to upgrade their existing mobile networks to the faster fourth generation LTE technology. Both Huawei and ZTE, along with rivals like Nokia Siemens Networks and Ericsson, are all competing to offer this technology to telecommunication operators worldwide.

Data cards, which allow laptops to connect to cellular networks, are a major product of both companies. Huawei alleges in its lawsuit that the patented design for its E180 datacard is being used by ZTE.

Matt Walker, an analyst with research firm Ovum, said of the lawsuits, "As an outsider, it is not possible to know who is in the 'right' here. These disputes are rarely black and white, even to objective insiders."

Courts are more often being asked to step in and arbitrate intellectual property disputes in the telecommunication industry, he added. "Hopefully this will be resolved quickly, as nobody but lawyers benefits from a long, drawn out process."

ZTE is also involved in a legal battle with Ericsson, which filed a lawsuit in the U.K., Italy and Germany earlier this month against the Chinese company. for patent infringement relating to several handset models. ZTE then filed its own patent infringement lawsuit against Ericsson in China involving network technology.

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Tags Huawei Technologiestelecommunicationintellectual propertypatentlegalZTE

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Michael Kan

IDG News Service
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