Huawei sues Samsung for alleged patent infringement

By Zhang Ye Source:Global Times Published: 2016-5-25 23:08:01

Firms expected to reach compromise on tech sharing

Customers try out Huawei smartphones at a store in Yichang, Central China's Hubei Province. Photo: IC


Huawei Technologies Co announced on Wednesday that it was suing Samsung Electronics Co in both China and the US for alleged infringement of its smartphone patents.

Analysts said that the intellectual property challenge could be a bargaining chip for Huawei to tap the South Korean firm's rich patent portfolio.

Huawei, a leading Chinese telecommunications equipment manufacturer, is seeking compensation for what it said was unlicensed use of its cellular communication technology and software in Samsung's smartphones, according to a statement Huawei e-mailed to the Global Times on Wednesday.

The company said it hoped Samsung could respect Huawei's research findings and intellectual property "and stop violating our patents." Huawei also hopes to work together with Samsung "to drive the industry forward," the statement said.

Samsung did not reply to e-mail inquiries from the Global Times by press time. Calls to their PR representatives also remained unanswered.

However, according to Reuters, Samsung said on Wednesday it would "take appropriate action to defend Samsung's business interests."

Huawei filed its lawsuits with the US District Court of the Northern District of California and Shenzhen Intermediate People's Court, which analysts said suggests that the dispute involves Samsung phones sold in both the US and Chinese markets.

Handicapping Samsung

"The lawsuits are not aimed at punishing its competitor," Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, told the Global Times on Wednesday.

"Huawei wants to keep Samsung handicapped through lawsuits, as the Chinese brand is racing to conquer the US mobile market," said Zhang. 

After years of efforts, Huawei still had only 1 percent of the US smartphone market by March 2016, according to data released in May by Hong Kong-based Counterpoint Research. The US market was led by Samsung with a 28.8 percent share, thanks to strong demand for the latest Samsung Galaxy S7 model. US phone maker Apple Inc was in second place with a 23 percent share.

"If the courts favor Huawei, Samsung would either face a huge financial penalty or the risk of some of its smartphone models being pushed out of the world's two biggest smartphone markets," Zhao Zhanling, a legal counsel with the Internet Society of China, told the Global Times on Wednesday.

The lawsuits could be a further setback for Samsung, which is already facing shrinking market share in China, the world's largest smartphone market, Zhao noted.

In 2015, Samsung's phone sales in China continued declining, and the company's 7.6 percent share of the market was overtaken by Chinese brands Huawei and Xiaomi with 15.7 percent and 14.8 percent, respectively, according to a report iiMedia released in April.

But analysts also said the dispute would probably be settled out of court, because such lawsuits are usually very costly and time-consuming.

"A compromise may be initiated by Samsung, giving Huawei a chance to make a cross-licensing deal in which the two sides share patents," said Zhang.

Huawei said in its latest annual report that it owned 50,377 granted patents as of December 31, 2015. Meanwhile, Samsung has 63,434 grants, according to a report by the UK-based Intellectual Asset Management magazine in April.

The lawsuits also marked the first intellectual property spat with the world's top handset maker by a Chinese tech company, as well as a reversal of the normal roles in China, with domestic companies usually being on the receiving end of intellectual property patent infringement allegations, said Zhao.

In 2015, Chinese smartphone maker Xiaomi Inc was forced to temporarily halt smartphone sales in India after receiving a patent violation complaint from telecom equipment manufacturer Ericsson.

"Huawei will set other Chinese companies an example, showing that they can also wield intellectual property law as a weapon against competitors as long as they have a rich patent portfolio," Zhao noted. 

Huawei has been beefing up its efforts to accumulate high-value patents in recent years. It invested $9.2 billion in R&D during 2015, or 15 percent of the company's sales revenues for the year, according to the statement. 

A report issued by the World Intellectual Property Organization in March said that Huawei applied for 3,898 patents in 2015, up 456 from the previous year.


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