At an initial glance, the news that Huawei (one of China's leading telecommunications and smartphone providers) has commenced patent proceedings overseas doesn't seem startling or even particularly interesting. But the way it has gone about taking those proceedings is pretty interesting (particularly if you're a bit of a law nerd like I am).
In a more and more common trend, earlier this year Huawei commenced several sets of patent infringement proceedings against T-Mobile (a mobile carrier in the US) in the Eastern District of Texas.That district is well-known (verging on infamous) to be friendly to patent owners - which goes some way to explaining why (despite recent legislative attempts to restrict forum shopping in the US) nearly half of all patent litigation in the US occurs in this one district. Not exactly a ground breaking strategy, but one which has proven very effective over the years by increasing pressure on the ‘infringers’ to settle, or face lengthy and costly infringement proceedings.
Now I’m not suggesting that Huawei is a patent troll (because it really isn’t), but a basic version of this strategy – i.e. make patent litigation look as complicated, long and expensive as possible – has been used to great effect by patent trolls to force companies into settlements for a number of years.
Where Huawei’s strategy becomes more interesting relates the second part of its patent litigation strategy.It declared a number of patents as standard-essential patents and made a FRAND (Fair Reasonable And Non-Discriminatory) licensing offer to T-Mobile - patent trolls, generally speaking, like to extract higher royalties / settlement sums than available under a FRAND licence. T-Mobile rejected the FRAND offer, saying it wasn’t actually FRAND, so Huawei has recently filed a new set of proceedings, seeking declaratory judgment to compel T-Mobile to comply with standard-essential patent FRAND obligations.
Unlike its earlier patent infringement filings, this application doesn’t seek damages from T-Mobile, instead it seeks a declaration from the court that the licensing offer it made to T-Mobile does, in fact, accord with FRAND principles.
Given the nature of this application, it is likely to be heard before the various patent infringement proceedings, and if successful (and Huawei must be reasonably confident to have made this type of application) then it will significantly increase pressure on T-Mobile to settle, prior to determination of the patent infringement proceedings.
Huawei appears to be becoming more assertive in obtaining and enforcing its intellectual property rights. If it keeps on implementing well thought out strategies to enforce those rights, it is likely to be more and more successful.
While this example is in the United States, there are various levers available to rights holders in other jurisdictions, like Australia and New Zealand, to similarly assist in the implementation of an effective litigation strategy.
Disputes can become eye-wateringly long and expensive and not ultimately produce an outcome that helps the business. An example is the Australian Apple v Samsung proceedings in (that had a similar background) which after significant expense and distraction for both parties ultimately ended in a draw.
Potential litigants need to consider their litigation strategy carefully and adopt one which helps resolve disputes efficiently and effectively and obtain successful commercial outcome.Getting the right advice is a critical step in that process.
Huawei has accelerated its patent assertion campaign on two fronts over the past week, launching a new complaint against T-Mobile in the United States and a further suit against Samsung in China. As reported by the Puget Sound Business Journal, Huawei filed a complaint on Tuesday in the Eastern District of Texas against T-Mobile USA, a local subsidiary of Deutsche Telekom. This is the latest salvo in a patent dispute that dates back to June 2014.