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| Chinese sales representatives wait for customers at a Huawei retails shop in Beijing. / AP-Yonhap |
Tech giants in legal dispute over patents
By Kim Yoo-chul
Samsung Electronics said Wednesday it will file a countersuit against Huawei Technologies of China over patent disputes involving mobile devices and communication technology.
Huawei filed a suit against Samsung, Tuesday, claiming that the Korean company infringed on 11 standard essential patents (SEPs) it owned.
It said Samsung reaped huge gains without paying royalties for the use of the patents.
In reaction, Samsung called the allegation by the Chinese telecommunication equipment maker "groundless."
"We are going to file a countersuit against Huawei," Ahn Seung-ho, an executive vice president of Samsung, told reporters.
He said the company is reviewing legal documents filed by Huawei with the United States District Court, Northern District of California, and China, suing Samsung Electronics, Samsung Electronics America and Samsung Research America.
"Samsung and its affiliates have earned billions of dollars by selling UMTS and LTE-compliant products that use Huawei's technology," Huawei said in the documents. "The sales have propelled Samsung to be a market leader in the smartphone and tablet markets."
It is not known whether Huawei is seeking a complete sales ban on Samsung products using its patents in the United States.
Samsung Electronics did not comment on the background of the lawsuit.
Huawei Korea said that it has no authority to issue statements or to make comments about the issue.
The Chinese company is one of Samsung's major clients buying memory chips and displays.
Legal officials said the patent dispute reflects a breakdown in licensing negotiations.
All LTE-enabled mobile devices use some form of SEPs that are usually cross-licensed between companies.
In the lawsuit, Huawei said it notified Samsung of the patent infringement on July 19, 2013, but the Korean firm did not respond to requests for discussions on licensing.
"Huawei hopes to strike a comprehensive cross-licensing agreement with Samsung Electronics, allowing it access to some Samsung patents," said one local expert.
He said Samsung faces a dilemma as it doesn't necessarily need Huawei patents; but China is the world's biggest single market for the company, he added.
Huawei said that all Samsung's latest mobile lineup from the Galaxy S2 to Galaxy S7 edge, as well as the Note series, used its patented technology.
This is the first time that a Chinese company has initiated a lawsuit against Samsung.
The action comes after U.S.-based mobile chipset titan Qualcomm signed patent licensing deals with HiSense and Yulong Computer Telecommunication Scientific (also known as Coolpad), and agreed to lower the royalties paid by them.
This agreement came after Qualcomm was investigated by China's anti-monopoly regulator, the National Development and Reform Commission (NDRC).
"The situation will be very complicated as there is a chance that Samsung will come under the scrutiny of the NDRC if the patent dispute with Huawei ends up without results. Samsung is urged to find a solution that will be beneficial to both," said the expert.
Samsung Electronics share prices closed up 24,000 won or 1.89 percent at 1,295,000 won, Wednesday. The benchmark KOSPI closed up 1.18 percent at 1,960.51 points.
Huawei said it spent 10.8 trillion won on research and development (R&D) projects last year, which accounted for 15 percent of its sales in 2015.
As of last year, Huawei owned 50,377 patents. It filed 3,898 patents in 2015, becoming the top patent filer for a second straight year.
Huawei was late in the smartphone industry; however, it is the global leader in the telecommunications equipment arena.
Huawei has licensing agreements with Ericsson, Nokia and Alcatel-Lucent, as well as other major telecom companies.
