Huawei Is Demanding 1 Billion Dollar From Verizon For Patent Licensing

Huawei is demanding $1 billion dollars from Verizon Communications Inc for the license of the rights to patented technology. This can herald a change in the strategy of the Chinese company for the US market.

This demand was made in a February letter, as stated by a person familiar with the matter. It is believed that the amount of money will be for over 230 patents. Verizon refused to comment because it involves legal issues.

Here is what Rich Young, the company’s spokesperson, said about that:

Here is why this patent matter is totally normal:

Is Patent Licensing A Common Move?

In industries like telecommunications, patent licensing is not a strange concept at all. The fast development of technology has made it harder to avoid violating patent rights. At the moment, the number of US patents is millions, and a smartphone maker will typically need up to thousands of them. Apple, Nokia, and Qualcomm have thousands of patents like that.

These companies usually try to make money from these patents. For example, Nokia can earn as much as $1 billion per year from licensing its patents to other companies.

Firms like Verizon will put effort in finding out the patents they might violate, but that seems to be an impossible task as there are so many of them granted every year.

Here is what Gaston Kroub, a New York-based patent lawyer, said:

It is possible that Huawei has been aware of the violation for some time, but they kept quiet for business reasons. At least until now.

What Is Huawei Going To Do If Verizon Does Not Pay?

If Verizon refuses to pay, Huawei may have to go to US court to sue the company for patent violation. Although this kind of dispute can be resolved without the two parties going to court, litigation is still a common solution.

The patent owner has the right to ask the judge to stop the sales of infringing products. While this move is rare in the US, it still has the power to push the other party to agree on a settlement.

According to some experts in the field, Huawei was ready to go to court:

How Serious Is Huawei In Enforcing The Patents?

Huawei is usually the company at the other end of a lawsuit involving patent licensing in the US, but that can change in the future.

Around a decade ago, Huawei made use of only a small number of patents, but ever since 2007, it has become more aggressive in this. In recent years, the number has increased dramatically.

As the US government has made its move to limit Huawei’s ability to make money in the country, the Chinese company might have more reasons to demand patent licensing.

When the more traditional way of generating revenue is officially close to Huawei, the company might use this method to somehow take advantage of the US market.

Here is what Marco Rubio, a Republican Senator, said on Twitter about the case: