It looks like the dragon might finally be coming home to roost.
After an order by the High Court of the United Kingdom, Huawei, the Chinese megabrand, faces an injunction on the sale of its smartphones in the U.K.
The company has been in a long-running legal battle with Unwired Planet, an American patent owner, over royalty payments related to key networking technology used in Huawei’s devices.
The High Court ruled this week that Huawei must pay Unwired Planet for patent infringement. The ruling also specified that in order to keep their sales going, Huawei must license the patents from the patent holder.
The catch is that Unwired Planet is adamant on issue only a global license, which will obviously cost Huawei more, and Huawei wants one specifically for the U.K. Unwired Planet is clearly working on the premise that the nature of the license is such, that it is by standard, only issued on a global scale.
But on the other hand, the only reason Huawei has even come to the table to talk about the license is because a court is holding a gun to its head; its natural for them to want to cut the cheapest possible deal.
An element of the ruling might, however, also be a relief for Huawei in that regard though. As a part of the ruling, the global royalty rates ordered by the court were much lower than the ones sought by Unwired Planet. This might give Huawei the much-needed nudging to cut a deal.
“We welcome the decision by the Court that Unwired Planet’s royalty rate demands have been found to be unreasonable”, a spokesman said. “Huawei is still evaluating the decision as well as its possible next steps. Huawei does not believe that this decision will adversely affect its global business operations”.
Huawei, currently, is the third largest manufacturer of smartphones in the world. Even though its share of the market in the U.K. is considerably lesser than it’s standing on the global scene, the Chinese megabrand has established itself quite well in this usually-unfriendly Western market.
Unwired Planet, before the suit with Huawei, had also gone to court with Google and Samsung, within the U.K. Both of those companies have successfully reached a deal with Unwired Planet to keep their shops running.
Even though the move of granting an injunction for the sale of a smartphone company’s products is an unprecedented move in the British territory, it comes in the light of what has been quite a hot topic for debate lately – intellectual property right and violations.
The thing about brands like Huawei, most of them incidentally Chinese, is that they are usually quite lax and loose about using technology that already exists in the market. This make their devices cheaper, yes, but technically, the secret sauce is not always theirs.
It is thus that they become the possible hot spots for patent infringements and violations of intellectual property. This is also the reason why Xiaomi has not yet entered the U.S. market, as they are said to be vulnerable to tons of lawsuits the moment their smartphone portfolio sets official foot on U.S. shores.
It is for the same reason (possible patent infringements) that Huawei too, does not sell in the U.S. market. The company has built itself up as a mock-up of Apple, but it can only sell smartphone accessories in the U.S. market for now, for the fear that the country’s patents and intellectual property laws will eat them alive.
Their sale, in the European markets, is also quite selective and cautionary, by the way.
Huawei, however, is not alone the allegations of patent infringements and violations of intellectual property. It is because of the bowl of soup that intellectual property rights have become around the world that smartphone makers have clashed a lot with each other and with specialist patent owners in courts around the world in the last few years.
The claims have always been that the technology in the smartphones has either been unlawfully copied, or someone is not being paid enough for the use of technology, or that someone is demanding too much.
The truth of the matter however is that in most cases, it is a chicken-and-egg situation, where it is impossible to tell what exactly happened historically – hence the correct lens is not usually available to apportion blame for the circumvention.
For now, though, Huawei seems to be stuck. Even though it believes that the impending injunction on the sale of its smartphones in the U.K. might not have an impact on its global sales, Unwired Planet might be ready to file in more courts in other countries where it believes its patents are being infringed upon. And until they do reach a deal, the noose is only going to tighten around Huawei.
So, will Huawei finally come home to roost and cut a deal, or will they go toe-to-toe in court?
Well, they have some strategising and thinking to do on that.
Also published on Medium.