Shenzhen court rules in favor of Huawei over rival Samsung

A court ruling might prompt concerned parties in the intellectual property case between Chinese smart phone maker Huawei Technologies and its South Korean rival Samsung to return to the negotiating table for a patent cross-licensing deal, industrial observers said.

The Shenzhen Intermediate People's Court ruled against Samsung on Jan 12, ordering it to stop unauthorized use of Huawei's patented wireless communications technologies in production and sales.

The court found that the technologies in question are essential patents used to comply with 4G technical standards, and that Samsung had deliberately slowed down cross-licensing negotiations starting in July 2011. This constituted a violation of the "fair, reasonable and non-discriminatory" terms and principles, commonly accepted in intellectual property licensing.

Huawei said the verdict reflected the continuous improvement in China's intellectual property protection.

In response to this latest blow, Samsung said in a statement that it would review the decision and determine an appropriate response.

The ban by the court however, will not necessarily be followed by the elbowing of Samsung's related gadgets out of the market or shutdowns of its involved plants. Instead, it can still find a way out via legal means, such as reaching an agreement on patent cross-licensing with Huawei, said Li Shunde, a researcher of law and IP rights at the Chinese Academy of Social Sciences.

"The patent dispute is, in essence, due to market competition," Li said. "Such a legal procedure will help to gain more market share and advantages."

The settlement will help to rebalance the industry and even enable better cooperation in patents, he noted.

The Shenzhen court decision was just another episode in an ongoing saga between the two rivals.

Back in 2016, Huawei took legal action against Samsung, both in China and California in the United States, claiming infringements on some of its patents.

In response, Samsung fired back with a countersuit in multiple locales in the same year, claiming damages totaling 161 million yuan ($25 million), double the alleged amount in a complaint Huawei filed with the Quanzhou Intermediate People's Court in Fujian province a month earlier.

In April 2017, the Quanzhou court ordered Samsung's Chinese subsidiaries to pay Huawei 80 million yuan in damages and to stop manufacturing and selling more than 20 models from the Galaxy smart phone series.

"The reason for Huawei's patent dispute with Samsung lies in that it hopes to obtain reasonable business returns through patent licensing," said Li Junhui, an intellectual property researcher at China University of Political Science and Law.

Because Huawei holds some essential patents related to 4G technology standards, Samsung's defeat could also affect other smart phone manufacturers, Li said.

Data from research firm Counterpoint showed that Huawei was the world's third largest smart phone manufacturer during the third quarter of last year, accounting for 10 percent of the global total shipments.

Apple ranked No 1 on the global brand chart by smartphone shipments, taking up 21 percent, and Samsung took second place with 12 percent.

(China Daily 01/18/2018 page17)