Computer networking company Netgear has taken legal action against Chinese tech giant Huawei, filing a lawsuit in a California federal court on Tuesday. Netgear alleges that Huawei violated U.S. antitrust laws by refusing to license its patents on reasonable terms, accusing the company of fraud, racketeering, and other offenses.
According to Reuters, the core of Netgear’s complaint revolves around Huawei’s alleged withholding of patent licenses crucial for Netgear’s routers to comply with international Wi-Fi networking standards. According to Netgear, Huawei’s actions hinder fair competition by forcing companies into costly litigation or compelling them to meet exorbitant licensing demands.
In the legal filing, Netgear contends that Huawei leverages patent-infringement lawsuits strategically to inflate licensing rates, creating a scenario where other companies must either engage in prolonged legal battles or succumb to Huawei’s pricing demands. The complaint cites Huawei’s similar infringement lawsuits against Netgear in Germany and China.
Standard-essential patents, covering inventions necessary for compliance with international technical standards, are at the center of the dispute. Such patents are expected to be licensed on fair and reasonable terms, as mandated by standards organizations overseeing technologies like Bluetooth and 5G.
Netgear claims that Huawei’s refusal to engage in fair licensing negotiations, coupled with its demand for “significant” fees, indicates a “take it or leave it” strategy aimed at extracting supracompetitive rates from Netgear under the threat of legal action. The lawsuit asserts that Huawei has employed a similar approach against other companies, including Verizon, L3Harris, and T-Mobile.
The complaint further accuses Huawei of monopolizing standard-essential technology and engaging in racketeering through a “worldwide scheme.” Netgear alleges that Huawei’s tactics aim to “dominate global markets by unlawfully taxing successful standards” at anti-competitive rates.
While representatives for Huawei have not yet responded to requests for comment, Netgear’s attorney declined to provide additional statements on the ongoing lawsuit.
In 2022, Huawei reported earnings of $560 million from patent royalties, adding another layer of complexity to the antitrust allegations as Netgear seeks legal remedies for what it perceives as unfair business practices and misuse of essential patents.