Huawei Sued by InterDigital in U.K. Over Patent Royalties

(Bloomberg) --

InterDigital Inc. said it filed a patent-infringement action in the U.K. versus Huawei Technologies Co. because it doesn’t think it can get a fair hearing in a royalty dispute in China.

InterDigital claims it’s entitled to compensation for Huawei’s use of patented inventions related to industry standards for 3G, 4G and 5G telecommunications. The suit came after 18 months of negotiations failed to result in an agreement to renew an earlier license -- mandated by an arbitration panel -- that expired a year ago, InterDigital said in a statement.

The choice of the U.K. is no accident -- the nation’s highest court is considering whether British courts can be the arbiters of global patent rates when it comes to standard-essential technology. A trial judge had said it had the authority to set the global rates sought by other patent owners against Huawei.

“InterDigital is committed to constructive, arm’s-length negotiation, fair licensing, and the use of impartial arbitration when parties are simply unable to reach agreement,” InterDigital Chief Executive Officer William Merritt said in a statement.

Once the earlier contract expired, Huawei filed its own suit, in Shenzhen Intermediate People’s Court in China, seeking a ruling that InterDigital violated its obligations to license its patents on “fair and reasonable” terms. Companies that participate in establishing standards are required to follow such a pledge.

Huawei officials didn’t immediately return queries seeking comment. In legal arguments before the U.K. Supreme Court, though, Huawei maintains that the Chinese courts are the more appropriate forum if there’s a single court to hear these disputes since the bulk of its sales are in China.

Typically, these types of disputes span the globe with each side seeking an advantage in different national courts to gain leverage in negotiations. That can be both costly and time-consuming.

InterDigital contends that it can’t get a fair treatment in the Chinese court. A study conducted by a law firm the company hired showed that Huawei ultimately prevailed in every one of more than two dozens cases before the Shenzhen court, InterDigital said.

In the U.K. case, InterDigital said it’s seeking either a ruling that its offer to Huawei was fair, or for a court to set its own global rate. InterDigital said it has offered to put the case before an arbitrator who would set a binding rate but was rebuffed.

Huawei’s royalty fights are just part of the Chinese telecom giant’s legal woes. The company is challenging the Trump administration’s restrictions on commerce with U.S. companies and U.K. Prime Minister Boris Johnson on Wednesday hinted the company may be barred from the nation’s 5G infrastructure.

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net;Colin Keatinge in London at ckeatinge@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman, Justin Blum

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