Huawei sues ZTE

Matt Walker, principal analyst, Ovum.

AUSTRALIA: Huawei has recently filed suit against ZTE in three European countries, alleging patent and trade mark infringement related to data cards and LTE technologies.

As an outsider, it is not possible to know who is in the 'right' here. These disputes are rarely black and white, even to objective insiders. It is unfortunate that the companies could not resolve their dispute directly, but they are hardly alone. Courts are asked to step in and arbitrate intellectual property disputes all the time, very often lately in telecom. Hopefully this will be resolved quickly, as nobody but the lawyers benefits from a long, drawn-out process.

In fact, these suits are sometimes encouraged by lawyers looking to stir up lucrative casework – even to the detriment of the public interest. Like any market, the legal market sometimes is driven by a ‘supply-side pull’ dynamic.

Beyond this case, it’s well known that Huawei and ZTE are long-time rivals. Huawei has grown faster recently, and has high ambitions. Given this history, Huawei may aspire to be China’s premiere national tech ‘champion,’ in which case it needs to carefully differentiate itself from other contenders.

The national origins of companies should not cloud the workings of markets, though. There is plenty of room in the global telecom/tech sector for Huawei, ZTE and many more vendors that happen to be located in China.