InterDigital Wireless & Qualcomm Inc aim to license their 5G tech to China’s Huawei despite U.S. ban

The U.S. ban on selling American technology to Chinese firms, which now has a grace period of 90 days, does not cover patents. Moreover Huawei owns both firms sizeable dues … cutting off business relations could potential mean massive writedowns if not write-offs.

In a significant development, patent attorneys of InterDigital Wireless Inc stated, it can license its 5G network technology to China’s Huawei Technologies Co Ltd. This is despite the threat of a U.S. ban on U.S. companies selling advanced American technologies, including chips and software to the Chinese firms.

Qualcomm Inc can also do so.

Significantly, InterDigital and Qualcomm are two major American holders of patents for wireless networking technology, including the 5G networks which is going to be rolled out in China this year.

Last week, U.S. President Donald Trump had issued an executive order which restricts the ability of U.S. firms to sell technology to Huawei; on Monday, some of those restrictions were however eased for 90 days.

InterDigital’s business model revolves around developing and patenting wireless technologies which it then licensing out. It believes it can continue in its efforts to strike a 5G deal with Huawei since export control laws do not cover patents – which are public records and therefore not confidential technology.

“The addition of Huawei to the Entity List does not prevent InterDigital from entering into a patent license agreement with Huawei, because our patents cover technologies that are publicly available and therefore outside the scope of U.S. export control laws,” said InterDigital spokesman Patrick Van de Wille.

Qualcomm did not respond to a request for comment.

“If you’re giving Huawei rights to your patents, all that means in effect is that you’re not going to sue them,” said Erick Robinson, a partner with Dunlap Bennett & Ludwig who formerly worked as a patent attorney for Qualcomm in China. “You’re not passing on any information whatsoever.”

Huawei, the world’s third-largest smartphone provider and also a major provider of telecommunications gear, is a big customer for both InterDigital and Qualcomm. In 2017, Huawei was responsible for 14% of InterDigital’s $533 million revenues.

2017 is the most recent year for which figures are available.

Both American firms are in the middle of a licensing disputes with Huawei over 5G technology.

In January 2019, Huawei had sued InterDigital in China alleging it was seeking to heavy a price for its patents, a charge InterDigital disputes.

Qualcomm has had a patent deal with Huawei since 2014, but Huawei stopped paying in 2017.

Qualcomm expects to get $450 million in “good faith” payments this year as the two sides negotiate.

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