Chinese telecoms company takes more aggressive stance in US

Sue-Lin Wong in Shenzhen and Kiran Stacey in Washington
February 6, 2020

Huawei is suing Verizon for more than $1bn, in a sign of the company’s increasingly aggressive stance on taking legal action in the US as it battles to restore its reputation.

The Chinese telecoms equipment maker has accused Verizon of intellectual property theft, and is asking the US carrier to pay royalties for using about 230 of its patents after they were unable to agree on licence terms.

Huawei said on Thursday that it had filed patent infringement lawsuits against Verizon in the US district courts for the eastern and western districts of Texas.

“Verizon’s products and services have benefited from patented technology that Huawei developed over many years of research and development,” Song Liuping, Huawei’s chief legal officer, said.

“Unfortunately, when no agreement can be reached, we have no choice but to seek a legal remedy,” Mr Song added.

Huawei had attempted to negotiate with Verizon on six separate occasions in the past year before launching the suit, said a person at the company with knowledge of the talks.

Verizon said: “Huawei’s lawsuit filed overnight, in the very early morning, is nothing more than a PR stunt. This lawsuit is a sneak attack on our company and the entire tech ecosystem.”

The suit is the latest evidence of a new strategy in the US, where it has failed in its attempts to persuade members of the Trump administration and Congress to take a softer stance towards its operations there.

In December, the company launched a court appeal against the US telecoms regulator (FCC), alleging that it acted illegally when it banned the company’s customers from receiving federal broadband subsidies.

Huawei is also suing the US government over the National Defence Authorisation Act, which was passed by Congress in 2018 and which bans US government agencies and their contractors from buying Huawei telecoms equipment.

Alan Fan, the company’s head of legal strategy, said: “We have had no choice but to be more assertive, including bringing actions to court. We have more faith in the US’s well-regarded and independent judicial branch in our search for justice.”

In the lawsuit filed on Thursday, Huawei alleged that Verizon was using technology protected by 12 of its US patents. The company has asked for royalties as well as damages as compensation.

The patents in question relate to “optical transmission, digital communications and related services”, the person at Huawei said. None are to do with 5G technology, they added.

The filing names Verizon’s Smart Family and One Talk services as two examples.

Huawei, one of the world’s largest providers of telecommunications equipment, also has one of the biggest patent portfolios. More than 10,000 of its 80,000 patents are in the US but the Chinese group has found itself in the middle of deteriorating relations between Washington and Beijing.

US officials have had concerns about Huawei for years, and the Trump administration in early 2019 prohibited the Chinese company from purchasing critical US components, including semiconductors.

The company last year warned that it would charge more US companies for using its intellectual property while maintaining that it does not want to “weaponise” its patents and opposed exorbitant licensing fees.