Huawei Technologies Co. claims it was treated unfairly when the US government labeled it a security threat, but China’s largest technology company is seeking redress from the American jury system in a major patent dispute with Verizon Communications Inc.
A trial in Marshall, Texas, is set to begin Wednesday in Huawei’s case against Verizon over claims that it is using Huawei’s patented networking technology without a license. It is the first of two scheduled this year in connection with lawsuits Huawei filed against Verizon, the largest U.S. mobile carrier, last year.
Both of the deep-pocketed companies are hurling accusations at each other, demonstrating the depth of their animosity. Verizon claims Huawei is using its patented inventions, not the other way around, and has accused Huawei of failing to meet pledges to offer fair and reasonable licensing terms for its technologies.
Huawei has asked Verizon for more than $1 billion in damages, though the trial will only cover a small portion of that patent portfolio. The companies have not disclosed how much they are seeking in damages in this trial in court filings, and neither would comment prior to the trial. The challenge for District Judge Rodney Gilstrap is to keep the trial focused on patents for optical transport network systems, a critical technology that allows for the rapid transmission of large amounts of data, rather than on geopolitical issues.
Huawei has asked the judge to prevent Verizon from bringing up the US government’s designation of it as a national security threat, the Federal Communications Commission’s decision to prohibit subsidized purchases of Huawei equipment, and Verizon’s claims that the suit is retaliation for the government’s actions and Verizon’s decision not to sell Huawei phones.
At the same time, Verizon does not want Huawei to bring up the company’s lobbying efforts, such as its push for Florida Republican Senator Marco Rubio to introduce proposed legislation to prevent Huawei from collecting patent damages in US courts. That provision was never made law.
Many of the allegations outside of the patent issues are unlikely to be raised in front of the jury. The trial is only scheduled to last a week, and the judge heard several days of arguments about what the jury should be allowed to hear, though his rulings are sealed. Regardless, the businesses bring a lot of baggage to the courtroom.
The jury must decide whether Verizon infringes three Huawei patents, whether Huawei infringes two Verizon patents, and whether Huawei’s initial royalty demand complies with all owners of standard-essential patents’ obligation to license their inventions on “fair, reasonable, and non-discriminatory” terms.
Huawei claims that its three patents in the case are critical components of the G.709 industry standard for networks developed by the International Telecommunication Union. It accused Verizon of refusing to even discuss a license, despite the fact that the standard would benefit the New York-based company’s networks.
Verizon claimed Huawei’s demands were unreasonable. Verizon also claims that Huawei is utilizing two of its patented inventions for optical networks. Because the Verizon patents are not essential components of the standard, there is no cap on potential damages.
According to Weatherwax, the two sides are “scratching and clawing for data” that can change the dynamics of negotiations. “The idea is that if you can get a big verdict on just these few patents, it has to color the whole shebang’s negotiations.”
A second case, in which Huawei accuses Verizon of infringing on network infrastructure patents, including routers and Verizon’s Smart Family and One Talk applications, is set for trial in Waco, Texas, in October.
T-Mobile USA Inc. was previously sued by Huawei after licensing talks fell through. The companies settled their patent dispute in 2017, and Huawei has since been indicted in the United States on charges including stealing a secret T-Mobile phone-testing robot. While Huawei has stated that it will not weaponize its large patent portfolio, the cases are seen as a new sign of Huawei’s increasingly combative stance toward U.S. companies in the aftermath of crippling sanctions imposed by Washington.
At the same time, the company is reaching agreements with other companies, including one announced Wednesday with a Volkswagen AG supplier. According to Huawei, this is the company’s largest automotive licensing agreement for patents related to the 4G wireless standard.
It was dubbed “a model of how the increasingly close cooperation between the mobility industry and the information and communications industry can succeed” by the German automaker.