The two Chinese communications equipment makers have fired patent infringment suits against each other shortly after ZTE and Ericsson exchanged statements of claim

Huawei, ZTE trade lawsuits

BEIJING — Chinese telecommunications equipment supplier ZTE Corp. has fired back against its rival Huawei Technologies by filing its own patent infringement lawsuit against the company.

The legal action comes just one day after Huawei launched lawsuits in Europe against ZTE. Huawei’s lawsuits accuse ZTE of infringing on a series of patents relating to Huawei’s mobile broadband data cards, along with the company’s higher-speed fourth-generation LTE (Long Term Evolution) technologies.

ZTE’s lawsuit, filed in China on Friday, alleges Huawei has infringed on patents dealing with ZTE’s own fourth-generation LTE technologies. The company is asking Huawei to cease the violation and to pay compensation. ZTE will also take legal action outside China, it said.

Huawei and ZTE supply mobile operators around the world with telecommunications equipment. In Canada, Huawei is a network supplier to Telus Corp, and BCE Inc.’s Bell Mobility, while ZTE is behind Public Mobile’s network. Huawei’s plug-in USB modems for laptops can be found at Telus, Mobilicity and Wind Mobile. Wind also carries several Huawei handsets. Public Mobile’s handset lineup includes one ZTE phone.

ZTE was also targeted in a lawsuit earlier this month by another competitor. Ericsson has filed lawsuits in the U.K., Italy and Germany alleging that ZTE infringed on patents relating to several handset models. ZTE responded by filing its own patent lawsuit against Ericsson, accusing the company of infringing on patents involving telecommunications technologies.

Huawei could not be reached for immediate comment. The company said part of the objective with its own lawsuits was to “resolve this dispute through negotiation so that our technology is used in a lawful manner,” according to a statement

After filing its action, Huawei 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’s initial response was to say it was “astonished” that Huawei has taken legal action, 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.

(With files from Howard Solomon, Network World Canada)

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