Real Reason
Huawei Technologies Co. has dominated the Chinese smartphone market with the Chinese government’s support and a huge domestic market, threatening Samsung Electronics. As Chinese telecommunications-equipment maker has filed a patent infringement lawsuit against Samsung Electronics this time, all eyes are on its real intention.
A spokesperson for Samsung Electronics said, “The company will thoroughly review a counter-suit and actively take appropriate action,” and added that it should find out the real intention of Huawei, which suddenly sued the company, first.
According to industry sources and foreign media reports on May 25, Huawei filed a lawsuit against Samsung Electronics in both the U.S. District Court for the Northern District of California and China’s Shenzhen Intermediate People’s Court over alleged patent infringement concerning 11 smartphone and mobile network technologies. The lawsuit covers Samsung’s use of 4G LTE network technology, operation system and user interface software. Huawei argues that Samsung has infringed on its technologies which raise the downlink reception rate of smartphones and improve the downlink performance of systems. In addition, the company also insisted that Samsung infringed on its technology for communications equipment, including long-term evolution (LTE).
In the petition, Huawei claimed that it is abiding by the principle of Frand, an acronym referring to "fair, reasonable and non-discriminatory," for standard patents. Upon this principle, Huawei offered to charge Samsung a fair and reasonable rate, but Samsung refuses to pay, it said.
Industry sources say that Huawei’s underlying goal of the lawsuit would be to gain access to Samsung’s core technology through a cross-licensing deal in return for settling the patent dispute. Currently, Huawei has signed a cross-licensing contract with global tech companies such as Apple, Ericsson, Qualcomm, Nokia and Alcatel-Lucent. However, the company hasn’t made the agreement with Samsung Electronics yet. William Plummer, Huawei's US-based vice president for external affairs, said, “Our very strong preference is to resolve disputes on licensing through negotiations.”
Moreover, Huawei can improve the corporate image through the lawsuit, according to industry watchers. The mere fact that the company is engaged in war with Samsung Electronics, which is considered a global leading firm in the IT industry, will be able to change the image of Chinese firms, which have been believed to fall behind in IT technology. As Huawei has recently made a large investment in research and development (R&D), the company can promote it through the suit. The company invested 59.6 Yuan (US$9.08 billion or 10.74 trillion won), 15 percent of its annual sales, in R&D last year. It also applied for 3,898 patents last year, being ranked number 1 in the world for two years in a row.