Patently wrong?

A ruling by Chinese patent authorities favours Huawei over Samsung


Huawei bests Samsung in court

When NBA superstar Stephen Curry was giving autographs to fans during the Golden State Warriors’ pre-season trip to Shanghai this month, he lingered for a while over a sneaker given to him to sign. Curry showed it to a number of staffers before snapping a photo of it. Apparently he couldn’t tell whether it was fake or not: it likely was, since the Under Armor trainer, the Curry 4, won’t go on sale until next Friday (he signed the shoe anyway).

Incidents like this have gained China renown as the land of knock-off goods, and all these allegations keep its intellectual property lawyers busy.

One ongoing spat has been between local smartphone maker Huawei and South Korea’s Samsung. In June last year, Huawei sued Samsung’s Chinese units for infringing its patents on 20 models of smartphone and tablet. A month later Samsung responded with a patent suit against Huawei.

Samsung has fared less well in this fight. In April a Quanzhou-based court ruled in favour of Huawei, and ordered Samsung to pay the Chinese firm Rmb80 million ($11.6 million) in compensation. Meanwhile, Chinese authorities have also discredited the validity of the patent claim brought forward in Samsung’s counter-suit.

According to China Daily, 10 of the 16 patents that Samsung has accused Huawei of violating have been deemed invalid by the Patent Re-examination Board of the State Intellectual Property Office.

Wang Yanhui, head of Mobile China Alliance, admitted to the Global Times that these results probably won’t have a large impact on Samsung’s business but are more of a “symbolic” win for Huawei, demonstrating the growing competitiveness of domestic companies.

Samsung has also taken legal action against Huawei in America, but securing wins in its vast home market might help the Chinese handset champion challenge leaders like Apple and Samsung overseas.

Huawei, for example, also has its eyes on India. “We really believe India is one of the most important strategic markets in Huawei’s global layout,” Huawei India’s CEO Jay Chen told CNBC.

According to CNBC, Huawei doesn’t rank among the top five smartphone brands in India by shipment volume. Top place in the second quarter of this year belonged to Samsung. Pointedly, Allen Wang, director of the Huawei Product Development Centre in India said, “You will fail if you stop innovating, even if you are the market leader.”

In a new landmark for Chinese IP courts, a recently brought case features two foreign litigants. Last month Qualcomm turned to the authorities in Beijing as part of its feud with Apple and ambitiously requested that they ban the manufacture and sale of iPhones in China. Apple spokesman Josh Rosenstock predicted, “Like their other courtroom manoeuvres, we believe the latest legal effort will fail.”

Qualcomm is pursuing Apple for unpaid royalties over three patents – payments Apple is resisting because it doesn’t believe Qualcomm’s pricing regime is fair. For the use of its patented components, Qualcomm charges a percentage of the cost of the final product (in this case, an iPhone), rather than a fixed rate.

Apple CEO Tim Cook said during the company’s second quarter earnings call that they were “taking a principled stand on it, and we strongly believe we’re in the right”.

Although Qualcomm hasn’t always been in China’s good books – suffering an antitrust fine of $975 million in 2015 – since then the chipmaker and the government appear to have patched things up (see WiC377). But it seems unlikely the bonhomie will help Qualcomm in its latest courtroom battle.

After all, banning the manufacture of iPhones in China would deal an immediate blow to domestic employment. Moreover, according to Mike Walkley, an analyst at Canaccord Genuity, there is “little or no precedent” for a Chinese court accepting such a request from a US company.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.