Huawei moves to protect its patent, trademarks with legal action

* Huawei is a key partner and supplier in South Africa to MTN, Vodacom, Neotel, Telkom and Cell C.
* Huawei is the only major China-based equipment vendor to have signed patent cross-licence agreements with its industry peers. This is the key difference between Huawei and ZTE, which only signed licence agreements with Qualcomm.
* The reason why ZTE has signed cross-licence agreements with Qualcomm is because it cannot buy chips from Qualcomm without a patent agreement.
* The price competitiveness of ZTE comes from its patents infringements. Such infringements impact the long-term viability of the entire industry, eg, the data card market in Europe.
* Network operators may face unexpected lawsuits if they buy or sell products from companies like ZTE that infringes IPR (intellectual property rights).
* ZTE has its challenges with IPR payments. Ericsson has been negotiating with ZTE for four years and ZTE is still reluctant to sign an agreement. Recently, Ericsson initiated a similar lawsuit against ZTE. As such, there are considerable intellectual property risks for companies that use ZTE's products.

The spokesperson is Huawei's Chief Legal Officer, Dr Song Liuping.

Huawei has filed lawsuits in Germany, France, and Hungary against ZTE Corporation (ZTE) for patent and trademark infringement.

The lawsuits were filed on the basis that ZTE is infringing a series of Huawei's patents relating to data card and LTE (Long Term Evolution) technologies and illegally used a Huawei-registered trademark on some of its data card products.

Huawei's Chief Legal Officer, Dr Song Liuping, said: "Huawei was compelled to initiate this action in order to protect our innovations and registered intellectual property in Europe. Our objective is to stop the illegal use of Huawei's intellectual property and resolve this dispute through negotiation so that our technology is used in a lawful manner."

These lawsuits commenced after ZTE failed to respond to cease and desist letters requiring the company to stop carrying out the infringing acts that are the basis for these proceedings. Huawei had also actively invited ZTE on numerous occasions to enter into cross-patent licensing negotiations but was equally unsuccessful.

As Huawei has neither received any substantive response nor a commitment from ZTE to stop its infringements, the company has had no alternative but to use legal means to protect its legal interests by requesting that the courts prohibit ZTE's continued infringements of Huawei's trademark and patent rights.

Huawei has great respect for the rights of intellectual property holders and is equally committed to the protection of its own innovations and intellectual property. The company has signed a series of cross-licence agreements with major telecoms vendors and other intellectual property rights holders.

In 2010, Huawei paid US$222 million in patent licensing fees to obtain the legal right to use patents and technologies of other leading companies in the industry. Huawei also invests a considerable portion of its annual revenue in research and development. Its R&D expenditure in 2010 alone was RMB16.556 billion (USD2.5 billion).

"Intellectual property is among Huawei's most valuable assets. That is why we feel a responsibility to our customers and to our shareholders to do everything possible to protect these assets in any legal jurisdiction worldwide. Where violations are taking place, we will do whatever is required to ensure that the use of Huawei's intellectual property by any company is based on internationally accepted protocols and practices," Dr Song said.

Notes to editors:

In South Africa, Huawei is a key partner and supplier to MTN, Vodacom, Cell C, Neotel and Telkom.

Huawei is a leading global provider of commercial telecom networks and it is currently serving 45 of the world's top 50 telecom operators. Through continuous customer-centric innovation, Huawei responds quickly to customers' needs with a comprehensive, customised set of offerings. Huawei's products and solutions are deployed in over 140 countries and are supporting the communication needs of one-third of the world's population. As of December 2010, Huawei employed over 110 000 employees, 51 000 of whom are based outside of China. Huawei's international operations have an average localisation rate of 69%.

Huawei is privately held and is 100% owned by its employees. As a progressive organisation, Huawei undertakes management transformation benchmarked against industry best practices. Since 1997, IBM, Hay Group, PricewaterhouseCoopers, Fraunhofer-Gesellschaft and Accenture have served as Huawei's consultants in such areas as corporate management, human resources management, employee shareholding plans, financial management and quality control. In 2010, Huawei recorded unaudited revenues of USD 28 billion, a year-on-year increase of 24%. Huawei's financial results are audited on an annual basis by international accounting firm KPMG.