Huawei must honor patent judgment or face U.K. ban of its phones

Huawei, the Shenzhen, China-based company behind the top-of-the-line P10, is in hot water over a U.K. copyright dispute. On Thursday, the country’s English and High Wales Court handed down a judgment that could threaten the company’s ability to sell smartphones in the U.K.

It stemmed from an ongoing intellectual property battle between Huawei, Google, and Samsung, and Unwired Planet, a holding company. In 2014, Unwired Planet alleged that all three firms had infringed on six patents related to networking standards. Google settled in mid-2015, but Samsung and Huawei counterclaimed on the basis of the U.K.’s competition law.

In a series of trials that ran between October 2015 and July 2016, Huawei argued that five of those were standard-essential patents (SEPs) — patents which by law must be licensed on fair, reasonable, and non-discriminatory (FRAND) terms. But U.K.’s High Court of Justice Chancery Division Patents Court wasn’t entirely persuaded.

On Wednesday, Justice Birss said that Unwired Planet hadn’t run afoul of the U.K.’s competition law, and that it hadn’t abused its position by seeking compensation.

“The FRAND licence between Unwired Planet and Huawei is a worldwide licence,” he wrote in the court’s judgement. “Since Unwired Planet have established that Huawei have infringed […] and since Huawei have not been prepared to take a licence […] a final injunction to restrain infringement of these two patents by Huawei should be granted,” Birss J ordered.

Huawei originally offered to pay 0.034 percent of revenues on 4G equipment, but Unwired Planet wanted 1.69 percent on 4G handsets and 2.29 percent on Huawei’s cellular network equipment.

The court awarded Unwired 0.051 percent on 4G equipment and 0.052 percent on handsets, with rates of 0.032 percent on 3G phones, 0.016 percent on 3G infrastructure, and similar rates on 2G kit and phones.

Intellectually property firm EIP, which represented Unwired Planet during the trial, said it would exercise its right to ban Huawei products from sale if the smartphone maker didn’t agree to the court’s terms.

“The latest judgment, which sets out the basis on which Unwired Planet will be compensated for Huawei’s past infringements, also makes clear that unless Huawei agrees to enter into a worldwide licence for Unwired Planet’s patent portfolio, Huawei could be [enjoined] from selling its mobile telephones in the U.K.,” the lawyers said in a statement.

Huawei said that it welcomed the court’s decision to reduce Unwired Planet’s suggested licensing rates, and that it would evaluate the judgement before proceeding. “We welcome the decision by the Court that Unwired Planet’s royalty rate demands have been found to be unreasonable,” a Huawei spokesperson 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.”