Huawei, ZTE hit with ITC patent probe
US authorities heed patent trolls' throaty call for action
Chinese mobile comms giants Huawei and ZTE are in trouble with the US authorities again, this time as part of a wider patent investigation by the ITC which could result in some of their mobile device models being banned in the States.
The investigation, which includes 11 other big name tech companies including Acer, HTC, Amazon, Samsung and LG, was based on a complaint filed by three IP-related firms: Technology Properties Limited LLC, Phoenix Digital Solutions LLC, and Patriot Scientific Corporation.
A brief ITC release said the following:
The complaint alleges violations of section 337 of the Tariff Act of 1930 in the importation into the United States and sale of certain wireless consumer electronics devices and components thereof that infringe a patent asserted by the complainants. The complainants request that the USITC issue an exclusion order and cease and desist orders.
For ZTE and Huawei it will be yet another unwelcome distraction in the US. The two are already under investigation by the US House of Representatives Intelligence Committee of allegations the Chinese government is subsidizing the price of kit they sell in America.
In addition, the FBI is investigating ZTE over allegations it illegally flogged equipment made by US tech firms to Iran and then tried to cover-up its actions.
Huawei has also found it tough going in the States. It was force to drop a proposed $2m (£3.1m) acquisition of server firm 3Leaf Systems and saw a deal for network firm 3Com scuppered thanks to government pressure.
As a result, handset sales for the two are particularly important for growth in the US market, so the ITC case would appear to be pretty high stakes already.
ZTE last week announced that although revenue grew 15.2 per cent in the first half of 2012 compared to a year ago, its profits plunged by nearly 50 per cent.
Huawei did better but still saw its profits drop 22 per cent over the same period.
“ZTE is aware of this investigation and are actively preparing to respond to the suit,” a spokesperson told The Reg. “We hope to seek reasonable solutions based on the rules of mutual respect and mutual benefits.”
Huawei could not immediately be reached for comment. ®
Patriot Scientific Corporation?
How can the US government fail to heed their "throaty call"? That would be unpatriotic, wouldn't it?
Their case may well have merit, but it does seem their name is chosen with future litigation in mind, especially against foreign firms, rather than with any "patriot science" (whatever that may be) being carried out.
Unfortunately. As choice diminishes and profits dip, the grip will ever tighten until they ruin their own market. Then they'll turn to the public they've been screwing over and beg for a bailouts because they are "too big to fail".
Re: "Patriot Scientific Corporation?" That was exactly what struck me about this.
I am beginning to wonder if there is a new form of "isolationism" (take a look at pre-war American politics and the difficulties that Roosevelt had in getting "lease-lend" past Congress in the early days of the war if that seems unclear) developing amongst certain political and business forces in the US. Many such companies are (despite all the outsourcing and all that) beginning to feel the heat in terms of turnover and cash-flow. However, international trade agreements prevent them from using crude import barriers as they were used in the past (by all countries). What a lovely opportunity to re-introduce such barriers disguised as "defending patents", Oh, and no, I do not for one moment believe that this bunch are uniquely guilty, I am quite certain that if this patent insanity goes much further many other countries will be tempted to use IP law to circumvent free-trade agreements. I just find it very ironic given that during the eighties and the nineties the US was the big driver for establishing these agreements, that this means of circumventing them appears to be cropping first on this scale on that side of the pond (Samsung's fate, anyone?)