Router maker claims Chinese giant refuses to license on reasonable terms icon

Dan Robinson Thu 1 Feb 2024

Netgear is suing Huawei in California, accusing its networking kit rival of racketeering and anti-competitive behavior for refusing to license Wi-Fi patents it holds on reasonable and non-discriminatory (RAND) terms.

The complaint filed by Netgear (Case 2:24-cv-00824) on January 30 claims that Huawei is required to offer RAND terms for patents it holds on technologies related to Wi-Fi network standards as a condition of taking part in the IEEE standards bodies that defined those standards.

Instead, Netgear claims Huawei filed patent infringement cases against it in China and in Germany last year following letters and emails Huawei sent to the California-based company demanding that it stop manufacturing and selling Wi-Fi-enabled products that allegedly infringed on any of Huawei's patents.

We asked Huawei for its side of this dispute, but a spokesperson told us that the company does not comment on ongoing legal cases.

The case revolves around standard essential patents (SEPs), which are technologies that have been declared essential for the implementation of a technical standard. SEPs are thus different from other patents because they will be infringed by anyone implementing the standard.

For this reason, technical bodies such as the IEEE typically require companies involved in the standards process to disclose whether they will license on RAND terms any of their SEPs included in the standard to manufacturers that wish to make products compliant with them.

Netgear claims that IEEE has never included patented technology in a standard unless it could obtain a Letter of Assurance that the patent owner would license it to others on RAND terms.

It further claims that Huawei provided these letters to IEEE, offering assurances that the company would license its SEPs on RAND terms.

Instead, it is alleged that Huawei proceeded to exploit the fact that its technologies are included in Wi-Fi standards to demand "excessive and discriminatory royalties" from Netgear and other companies that make network products based on those standards.

Netgear also claims that Huawei declines to specify the exact patents allegedly infringed upon, and instead insists that companies take out a portfolio-wide license on an "all or nothing" or "take it or leave it" approach.

The complaint claims that Huawei has been seeking to grow its revenue through licensing activities, and this is partly to offset the restrictions the US and other governments have placed on sales of Huawei products.

Netgear claims that licensing patents is actually Huawei's primary revenue-generating activity in the US, and the company derives "substantial revenue" from this. Huawei received $560 million in royalty revenues during 2022, according to Reuters.

Last year, there were reports that Huawei was seeking to "put the squeeze" on companies for license fees relating to its sizeable patent portfolio in an effort to claw back some of the revenue it had lost due to sanctions.

Huawei's case against Netgear in Germany is reported to have resulted in a default judgment amounting to a country-wide sales ban on Netgear products in November.

Netgear claims in its court filing that it has suffered substantial damage as a result of Huawei's actions, and is seeking a judgment stating that Huawei's patent rights are subject to an implied license, plus recovery of damages from the Chinese company. ®