ZTE loses to Huawei in patent suit, plans to appeal

ZTE has lost the first round in a patent battle against fellow Chinese telecoms company Huawei in a German court. ZTE plans, of course, to appeal the decision and is telling customers not to worry.
Written by Moritz Jaeger, Contributor

Companies suing each other over infringement seems to be all the rage in the telecommunications industry. After lengthy battles between Apple and Samsung that covered subjects including whether a rounded corner can be patented (it can), a new verdict handed down by a German court this week signals the start of round two with the opening shots fired in the 'battle of the base stations'.

In a nutshell: Chinese manufacturer Huawei has sued rival ZTE (both headquartered in Shenzen, China) at the District Court of Mannheim, in Germany. Huawei claims that ZTE infringed base station related patents, including its 'Key Derivation Function' patent that handles handover in an LTE-based system.

The verdict is not final and not self-executing, according to ComputerWorld Australia citing a Mannheim court spokesman. But it is provisionally enforceable for Huawei: that is, if Huawei pays a bond of €1m, it can start enforcing the decision, forcing ZTE to pay up to €250,000 for every violation. However, if the verdict gets overturned by the next court (as ZTE is doubtless hoping it will be), Huawei would have to repay the fines.

ZTE said in a statement on Monday that it will appeal the current ruling at a higher court. The company also said it was confident that the decision will have no "impact on ZTE's business", including in Germany. ZTE notes that the court also dismissed an accusation by Huawei that ZTE infringed on its LTE terminal patents.

ZTE also highlighted that Huawei had started 10 separate patent infringement cases in Germany, France and Hungary. "ZTE has the prepared solutions to all relevant patent lawsuits. These lawsuits won't affect ZTE’s business operations around the globe. ZTE will pay close attention to these cases and guarantee that such lawsuits won’t interfere with the benefits of both the clients and the company," it said.

Huawei said: "Huawei welcomes the decision made by the Mannheim regional court. Huawei follows standard industry practices related to the granting of licenses to our industry peers, in accordance with the FRAND principles."

According to ZTE, two of the five patents discussed in Germany have already been invalidated by the Europe Patent Bureau, and the company aims to invalidate the other three. The one patent under issue in France has, ZTE says, already been declared invalid by German and Chinese courts. The four patent proceedings in Hungary have been quashed already after ZTE appealed for the patents' invalidation.

Of course, ZTE has its own set of patent litigation ongoing. Since 2011, ZTE has "filed up to 18 claims of patent infringement" against Huawei in Europe and China, it said in a statement. According to ZTE, the company won "several" of the patent cases and want to use every legal method available, including the ban of products, to protect its patents.

Looking at the industry's love of litigation, you can't help thinking it would probably be easier - and save a ton of money - if telecommunications companies started sending each other a designated amount of cash each year to cover all patent spats. Not only would it lighten the case load of several courts, the companies could also use the money saved on lawyers to innovate and invest in some crazy ideas — like better products.

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