Legal battlefield moves to Europe as they seek new terrain to boost sales

BEIJING - Right before Labor Day, when people are supposed to take a break, two of China's major telecom equipment makers were busy with lawsuits.

ZTE Corp's booth at the 2010 PT/Expo Comm China, the largest international information and communications technology event in Asia. Analysts said the lawsuits reflect that companies want to gain the upper hand in a new round of construction related to next-generation networks. [Photo/China Daily]

Huawei Technologies Co Ltd and ZTE Corp filed suit against each other over patents and trademarks, in the latest wrestling in the telecom industry amid white-hot competition.

Huawei Technologies, the bigger rival by sales, sued ZTE claiming patent and trademark infringement in Germany, France, and Hungary on April 28, the company said in a news release.

ZTE retaliated the next day, saying it had filed a patent infringement lawsuit against Huawei in China, accusing it of infringing ZTE's LTE-related patents.

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The lawsuits, among the many that have taken place in the telecom industry, reflected that companies want to gain the upper hand in a new round of construction related to next-generation networks by accusing rivals of infringing on property rights, analysts said.

Huawei said ZTE is infringing on its patents related to data-card and Long Term Evolution (LTE) - a high-speed mobile Internet standard - technologies. It also said ZTE used a trademark registered by Huawei on some of its products.

ZTE said in a statement on its website on April 29 that it has to "fight back" against any "quarrels".

The spat between Huawei and ZTE comes while competition in the telecom market is increasingly intensifying. Both companies have expanded beyond China into overseas markets as their growth at home slows. Europe, to which both have turned to boost sales, has thus become the battlefield, analysts said.

ZTE's revenue in China grew only 5.9 percent year-on-year to 32.2 billion yuan ($4.96 billion) in 2010, but it registered more than 50 percent growth in Europe, North America and Oceania, reaching 14.7 billion yuan over the same period, according to its financial report.

Huawei's revenue in China was up 9.7 percent year-on-year in 2010, reaching 64.8 billion yuan, while its overseas business grew 33.8 percent to 120.4 billion yuan in 2010, figures from its annual report showed. "We have maintained steady growth in Europe," the report said.

The spat between Huawei and ZTE is one of the many lawsuits in the telecom industry recently.

On April 1, Ericsson AB, the world's largest maker of mobile network equipment by revenue, sued ZTE in the UK, Germany and Italy alleging infringement of its technology patents.

Also in April, Huawei and Motorola Solution Inc settled a legal dispute with the latter agreeing to pay an undisclosed amount of transfer fee to Huawei.

Huawei previously sued the US company alleging infringement of intellectual property rights, and Motorola accused Huawei of stealing business secrets.