TELECOMS: Huawei Files New Suits Against Samsung, T-Mobile

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Bottom line: Huawei’s new lawsuits against Samsung in China and T-Mobile in the US are designed to show the company is now a major global player, and could also be preemptive to deflect attention from upcoming bad news.

Huawei files new suits against Samsung, T-Mobile

China’s latest smartphones superstar Huawei is suddenly getting quite aggressive in the courtroom, with word the company has filed new lawsuits against global leader Samsung (Seoul: 005930) and US wireless carrier T-Mobile (Nasdsaq: TMUS). Those reports are coming as new data show that Huawei boosted its position as China’s leading smartphone brand with 17.3 percent of the market in the second quarter. (English article) Huawei’s sales surge continues an ongoing trend, though the sudden courtroom aggression is relatively new for the company, which was more used to getting sued in the past than suing other companies over patent violations.

The rapid series of lawsuits appears to be Huawei’s way of telling the world that it’s playing in the global big leagues now, since most other major global brands like Apple (Nasdsaq: AAPL) and Samsung frequently file this kind of lawsuit. But the moves also come as Huawei faces a couple of major threats, one from potential sanctions in the US for illegally selling equipment to Iran and the other from a sharp slowdown in its own growth.

Let’s begin with the Samsung lawsuit, which is actually the second filed by Huawei against the world’s top smartphone brand. Huawei originally sued Samsung in both China and the US back in May over patent infringement violations. (previous post) Now media are reporting it filed a second lawsuit in the southern Chinese city of Quanzhou against the Korean company in June. (English article; Chinese article)

The original lawsuits in May were filed in San Francisco and the southern Chinese city of Shenzhen, so this means that Huawei is now suing Samsung in 3 separate cities. A Huawei spokeswoman says the nature of the case in China required the company to make technical filings to two courts, so it appears this latest suit is part of the earlier one in Shenzhen and could be procedural in nature.

Tackling T-Mobile

Meantime, Huawei is also filing its second recent lawsuit in the US, this time tackling T-Mobile, one of the four top US wireless carriers. (Chinese article) The reports say that Huawei took its action in the US state of Texas after T-Mobile refused to sign a licensing agreement related to Huawei’s 4G LTE technology.

The reports don’t really clarify if the lawsuit is related to smartphones or to T-Mobile’s actual 4G network. As a wireless network operator, T-Mobile offers smartphones to customers and also buys networking equipment from big suppliers.

In this case it seems highly unlikely the company purchased any networking equipment from Huawei, since the Chinese company is prohibited from selling such equipment in the US due to an informal ban imposed by Washington. It’s possible T-Mobile is selling Huawei phones, but again it seems unlikely that kind of arrangement wouldn’t be the basis for a lawsuit. It’s more likely that one of T-Mobile’s partners is supplying it with smartphones or equipment that may use Huawei’s technology. Either way, this is one of the first cases I can recall of a telecoms company suing a wireless carrier over alleged patent violations.

As I’ve said at the start, Huawei is far more accustomed to getting sued than the other way around, and this recent series of actions looks like its attempt to show it’s now a global player that will aggressively defend its patents. That contrasts sharply with China’s earlier smartphone superstar Xiaomi, whose meteoric rise came to a sudden halt last year in part due to concerns over patent lawsuits outside China.

Huawei may also be trying to flex its muscle in the run-up to an expected ruling soon that could find the company sold US networking equipment to Iran in violation of trade sanctions imposed by Washington. Separate reports last month also indicated that Huawei had sharply revised down its 2016 sales targets. (previous post). Thus one could also interpret these new lawsuits as preemptive measures designed to deflect attention from some negative new developments that could come later this year.

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