The Intermediate People's Court in Shenzhen recently ruled in favour of Huawei against Samsung in a case involving two standard-essential patents (SEP) owned by Huawei, after finding that Samsung infringed the two patents and had "maliciously delayed negotiations".
This decision is the latest in an ongoing saga of patent disputes between the Asian tech giants, which have been filing lawsuits against each other in China and the US since May 2016. In the ruling, Samsung was ordered to immediately stop the manufacturing and sales of their infringing products and to pay a small court fee, although it is not clear which of the phone models are affected.
Two main issues were considered in detail by the court during an 18-day trial - the first relates to whether the two patents owned by Huawei are essential to the 4G standard, and the other being whether FRAND was breached by either of the parties during the negotiation discussions.
On the first issue, the two patents asserted by Huawei were both declared as essential to the 4G/ LTE standard in the decision. It was also found that because Samsung manufactured and sold 4G capable terminal products in China, Huawei's patent rights were infringed. Samsung put forward an argument during the trial that Huawei's patents were exhausted through being implemented in Qualcomm's products, which were then used in Samsung products. However, this argument was not accepted as it was found that there could be no exhaustion, as Huawei did not grant any licence with regard to their 4G and LTE technology to Qualcomm. On the second issue, it was found that during the cross-licence talks between the companies Samsung made obvious violations of their FRAND obligations in both procedure and substance. On the other hand, it was decided that Huawei made no obvious breach of the FRAND principle as they made conscious efforts to resolve the conflict through negotiation and arbitration.
In the press release, the court indicated that this decision has a great significance on Shenzhen's "innovation-driven development strategy", as well as the "equal protection of the IP rights and interests of intellectual property owners home and abroad". An interesting point to note is that the Shenzhen court has appeared to have adopted a similar approach to its German counterparts, compared to what has been observed in Unwired Planet v. Huawei (UK) and TCL v. Ericsson (US). Instead of imposing a licence on the parties and/or setting the terms of a licence, the Chinese court has elected to grant a SEP injunction against future infringement.
Huawei first scored its patent infringement win against Samsung in April 2017 and was awarded 80 million RMB in damages, after Samsung filed its own patent infringement case against Huawei the previous year seeking 161 million RMB. This latest and second victory of Huawei in their legal battle against Samsung demonstrates how a strong commitment to maintaining a robust patent portfolio can help a company to remain successful in an increasingly favourable IP licensing and enforcement environment in China.
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