Vringo, ZTE butt heads in U.K. court over patent claims

Patent hoarder buys technology portfolio from ailing phone maker, and turns the technologies into a super-weapon to fire at its competitors. Rinse, repeat: What a surprise.
Written by Zack Whittaker, Contributor

Intellectual property protection firm Vringo has filed a patent lawsuit against Chinese mobile equipment firm ZTE for allegedly infringing cellular networking technologies.

Vringo filed the suit at the U.K. High Court of Justice against ZTE's U.K.-based subsidiary following a dispute between the two companies after Vringo claimed ZTE elected "not to take a license to patents" that belong to the intellectual property firm, according to David Cohen, Vringo's head of licensing in a statement released earlier today.

The firm said three of its European patents were infringed, adding that ZTE's cellular networking elements "fall within the scope of all three patents," while ZTE's multi-mode handsets -- that switch between GSM and UMTS -- fall within one patent.

According to Reuters, Vringo sent a letter in September asking ZTE to buy licenses to the patents for the telecommunications equipment it has been making since around 2002 on "fair and reasonable" (FRAND) terms.

Either ZTE ignored it, or couldn't understand the quaint written English verbose, ZTE failed to acquire such licenses.

However, the litigation gets a little more deep and complex as Vringo acquired the patents in question, which are registered to Nokia, from the Finland-based phone maker earlier this year.

Vringo sold 9.6 million common stock shares at $3.25 each -- a figure of $31.2 million in total -- for 500 Nokia-held patents and patents pending worldwide. At the time, it was seen as a good deal for Nokia, which continues to float with its head just above the water, while Vringo's move was seen as risky and almost-foolish because Nokia sold the patent portfolio at a bumped-up cost. The portfolio was actually only worth around $22 million, according to reports.

It's likely to assume that the Nokia patent portfolio was bought -- not to help out the phone maker in a time of need, despite the bump in price of almost $10 million more -- but in order for Vringo to squeeze every drop of blood out of the patent stone later on down the line.

All in all, it's not shaping up to be a great Monday for ZTE on both sides of the Atlantic.

ZTE, which was already having a bad day after networking giant Cisco ended its partnership after the firm allegedly sold Cisco-branded telecommunications equipment to Iran, was also embroiled in a U.S. House Intelligence Committee report that stated ZTE posed a "security threat" to the United States, reports sister site CNET.

Vringo's shares were up by as much as 21 percent in early morning trading, but currently stand at 16 percent from market open at the time of writing.

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