Recently an increasing number of Chinese smart phone makers have been exploring overseas markets, as a result of which, the number of patent infringement cases launched against them has also risen. Different actors in the sector have dealt with these kinds of infringement suits in various ways…

Huawei has gone on the offensive in patent litigation / Source: Huawei Press Photo

Chinese smart phone maker Huawei Technologies announced in May that the company was suing South Korean rival Samsung Electronics for infringement of its smart phone patents. Huawei has sued five companies at the Quanzhou Intermediate People’s Court in China, including Samsung, claiming that 16 Samsung smart phone models, including the Galaxy S7, infringe Huawei patents, demanding RMB80 million (US$12 million) in damages.

After filing the Samsung suit, Huawei also filed an infringement suit against T-Mobile, the fourth largest telecom operator in the US. According to Huawei, T-Mobile refused to accept patent licensing agreements but continued to use its 4G LTE related communication patents.

The uptick in this kind of litigation, aimed at getting a competitive edge in the market, points to increasing saturation of the smart phone market. But a more interesting question is how Chinese smart phone makers are dealing with infringement suits.

Thus far, different companies have adopted different strategies, with some denying infringement, some actively buying up patents and others going on the offensive by filing their own suits.

Denial: Meizu

In June 23, Qualcomm filed suit against Meizu with the Beijing Intellectual Property Court for owing outstanding patent licensing fees, asking for RMB520 million (US$78 million) damages. Meizu claimed its innocence at a brief press conference after Qualcomm filed the suit, however, stating that the Qualcomm patents are standard essential patents (SEPs) and that Qualcomm did not offer them under fair, reasonable and non-discriminatory (FRAND) terms, as required by the standard setting organization (SSO).

On June 30 Qualcomm then filed infringement suits against Meizu covering a broad range of features and technologies used in smart phones, including those relating to 3G (WCDMA and CDMA2000) and 4G (LTE) wireless communications standards. The complaints were filed with the Intellectual Property Courts in Beijing and Shanghai, and Qualcomm requested RMB17 million (US$2.5 million) in damages.

Qualcomm has stated that it negotiated for over a year with Meizu on patent licensing agreements consistent with the terms of the rectification plan submitted by Qualcomm to, and accepted by the China’s National Development and Reform Commission (NDRC) in 2015. More than 100 other Chinese companies have already accepted the rectification plan terms. However, Meizu has refused to engage in good faith negotiations with Qualcomm, choosing instead to engage only in delay tactics. Meizu did not respond to Qualcomm’s last offer in April 2016.

Buying Up Patents: Xiaomi

In December 2014, a New Delhi court banned Xiaomi from selling or importing phones into India following an infringement complaint from Ericsson. Ericsson claimed that the smart phone products of Xiaomi infringe eight of its patents covering ARM, EDGE and 3G technologies. The patent litigation in Indian awakened Xiaomi to its lack of a solid patent portfolio, leading the company to buy up patents. Although the number of invention patent applications that Xiaomi has filed in recent years has increased, the size of the company’s patent portfolio and its lacking quality has not helped the company in infringement suits, leading the company to buy up patents to strengthen its arsenal.

On October 23, 2015, Xiaomi acquired 32 wireless communication technology patents from Broadcom. Then on February 4, 2016, Xiaomi purchased 332 US patents from Intel, these patents cover a wide range of technology areas, including storage management, control logic, serial encoding, computer packaging, handheld terminals and circuit boards. Following this, on June 1, 2016, Xiaomi acquired 1500 patents from Microsoft.

Retaliation: Huawei

As mentioned above, Huawei has launched infringement suits against international communication giants at home and abroad. As one of the major SEP holders in 4G and 5G communication technologies, Huawei has put huge effort into enhancing its patent portfolio, which enables the company to retaliate and even go on the offensive with confidence.

The infringement suits against Samsung, for example, include 11 US patents, with technology ranging from 4G LTE communication technology to 2G/3G technologies. This shows that Huawei is an emerging player in the mobile communications market.

In addition to Huawei and Xiaomi, other Chinese smart phone makers such as ZTE, Lenovo and Oppo Electronics, among others, are also making substantial efforts in enhancing their intellectual property protection, whether in terms of applying for their own patents, buying the patents of others, or just licensing patents from others. This will be ever more important as Chinese smart phone makers increase their deployment beyond China.

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