Yahoo Finance Huawei faces huge bill after losing legal fight over 4G phone patents
Huawei has lost a landmark Supreme Court case over its use of 4G technology in mobile phones that has forced it to shell out tens of millions of pounds for licences.
Britain's Supreme Court ruled on Wednesday that Huawei and fellow Chinese smartphone maker ZTE must pay licence fees for the use of 4G technology patents.
Unwired Planet, a US company that charges for technology licences, had challenged Huawei’s use of “standard essential patents” it owned that had been acquired from telecoms firm Ericsson. Huawei and ZTE were also challenged by Conversant, another patent holder.
Unwired Planet demanded Huawei pay licences globally for its use of the technology and asked for an injunction on Huawei sales if it refused. The Supreme Court found that Unwired Planet's claims should be enforced across Huawei’s worldwide sales.
That finding leaves Huawei liable to paying 5p in every £100 to Unwired Planet on phones it sells. Lawyers for the claimants declined to comment on the size of the total payments, but with Huawei selling 240m handsets last year the liability could run into tens of millions of pounds.
A Huawei spokesman said: “Huawei has already made payments to Unwired Planet according to the agreement set by UK court and has settled with Unwired Planet’s parent company, PanOptis. As a result, no additional sums fall due as a result of this ruling.”
A similar fight between Apple and patent owner Panoptis, which also owns Unwired Planet, saw Apple forced to pay $506m (£384m) by a court in Texas. Apple faces a similar claim in the UK.
The disputes could lead to a substantial payday for Brevet, the US private equity firm that controls the patent firms.
The ruling could have major impacts on other smartphone makers and signal a new phase of “patent wars” as patent holders seek to secure new revenues out of designs for telecoms technology they own.
Patent portfolios have become increasingly valuable property, with private equity firms snapping up technologies and “hoarding” them in an effort to extract licencing fees, often spending millions of pounds on legal fees in the hope of winning at trial.
The original High Court judgment, which was appealed to the Supreme Court, is the first time a judge has set a patent licence fee in the UK.
Gary Moss, head of legal at EIP, which acted for Unwired Planet, said: “We and our clients have faced significant pressures along the way, including opponents with significant resources who have thrown everything at us in an attempt to deflect our clients from securing the relief to which they were entitled.
“Many in the industry thought that what we were attempting was crazy and hopeless. We always believed in our clients’ case and seven years later we are delighted to have our belief endorsed by the Supreme Court.”
A Huawei spokesperson did not immediately comment.
The defeat comes as Huawei’s smartphone business has been battered by US sanctions that have prevented it using Android software made by Google and could block it from access to key chips.
