ZTE, Huawei could be heading for rare China court fight over smartphone patents

PUBLISHED : Wednesday, 22 April, 2015, 5:06pm
UPDATED : Sunday, 26 April, 2015, 8:15am

Two of China’s top telecoms equipment makers could become embroiled in an unusual, high-profile legal spat after ZTE accused larger rival Huawei of copying its technology.

ZTE posted a letter on Weibo sent by its law firm on April 21 to Huawei that said Huawei’s Honor X2 and P8, launched in London last week, violated two patents on camera technology used in ZTE’s Nubia range.

“Faced with Huawei’s large-scale copying, we think it is time we stood up and protected the industry’s orderly and competitive environment by way of law,” said the blog post.

ZTE’s accusations come on the same day that Huawei launched the P8 in China, and also as Nubia prepares for the launch of its Z9 device on May 6.

On behalf of Nubia, the Guangdong Guanghe law firm asked that Huawei stop the manufacture and sale of the Honor X2 and “any other smartphones that may also have used the relevant technologies”. “According to relevant information, the P8 smartphone that your company launched in London is also suspected to have violated these patents,” the letter said.

ZTE said if Huawei did not respond, it may face legal action. That would be an unusual step in China, where companies shy away from direct legal challenges, especially between companies of comparable prowess.

You Yunting, an intellectual properties lawyer at Shanghai DeBund Law Firm, said the tussle came as the intellectual property legal system steadily matured on the mainland. “The government has long been trying to shed a copycat reputation and promote cutting-edge innovation,” he said, adding that growing competition in the industry made legal spats more likely.

But You said ZTE might also have other considerations in starting the scuffle the way it did.

“They are both very powerful companies in terms of patent holdings, and if ZTE is seriously going to sue Huawei using some of its patents, Huawei can sue them back using other patents. The result would be mutually destructive,” he said.

“My analysis is that ZTE don’t plan to take the case to court eventually, given it will take about two years for the case to come to a judgment. But starting such a dispute this way has given it the market attention that it needs – a lot more than Huawei needs it.”

Huawei sold more than 70 million mobile phones in 2014, according to market research firm Gartner, ranking it sixth in the world with a 3.8 per cent market share. ZTE sold around 54 million phones, coming ninth with a 2.9 per cent share.

Although authorities had been promoting more protection and stricter law enforcement, they were wary of stifling the country’s economy, especially the technology sector, which is still transitioning from copying the West to innovating, You said.