Qualcomm Inc. (QCOM), the technology licensing company run by CEO Steve Mollenkopf, said it filed two more patent infringement complaints against Meizu Technology Co. Ltd., a Chinese electronics company, for infringing patents covering a broad range of features and technologies used in smartphones, including those relating to 3G (WCDMA and CDMA2000) and 4G (LTE) wireless communications standards.
San Diego-based Qualcomm said the complaints, which are related to a complaint it filed last week in Beijing Intellectual Property Court, were filed in the Intellectual Property Courts in Beijing and Shanghai.
Qualcomm said it has for more than a year negotiated in good faith with Meizu to sign a patent license agreement consistent with the terms of the rectification plan submitted by Qualcomm to, and accepted by, China's National Development and Reform Commission (NDRC) in 2015. More than 100 other Chinese companies have already accepted the rectification plan terms, including the largest Chinese mobile device suppliers. The company said Meizu has refused to engage in good faith negotiations, choosing instead to engage only in delay tactics. Qualcomm said Meizu did not respond to Qualcomm's last offer in April 2016.
"Meizu has refused to engage in good-faith negotiations despite admitting that it sells products that infringe Qualcomm's valuable Chinese patents," said Don Rosenberg, executive vice president and general counsel, Qualcomm in a statement. "Meizu is attempting to obtain an unfair and improper cost advantage over its competitors. Regrettably, we must turn to court actions in order to protect our rights, and importantly, to maintain fairness and a level playing field for the more than 100 Chinese companies that are respectful of patent rights and have entered into license agreements in conformance with the resolution reached by Qualcomm with the NDRC."
Qualcomm is taking on a company with sophisticated backers including the Chinese social media giant Alibaba, which is run by CEO Jack Ma. Alibaba invested $590 million in Meizu in 2015.
A Qualcomm spokeswoman said the company filed the additional complaints in order to have access to additional remedies not available in last week's action. She declined to comment on what those remedies were.
Officials for Meizu couldn't be reached for comment. According to the South China Morning Post, Meizu may be getting ready for a long legal fight with Qualcomm because it believes the terms offered by Qualcomm are unfair and unreasonable.
The South China Morning Post reported on speculation in China that Qualcomm asked for 520 million yuan (HK$607.13 million) or $78.18 million.
The Qualcomm spokeswoman said the company has not publicly disclosed how much it is seeking from Meizu.
Jim Hoffmann, a partner with Halliday Financial Group, a China-focused investment advisory business, said Western companies may be disappointed with the outcome of enforcement actions in China against Chinese companies. He said despite the promise of injunctive relief they will find the cost to be high and the ability to win large damage awards to be low.
"Taking a western legalistic approach to China business has well defined limits historically," Hoffmann said. "We will wait to see if the China courts are willing to step up this time for the outsider. Perhaps someone will blink before the whole mechanism of IP licenses and royalties gets another Chinese stress test."
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