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US patent licensing firm says it received China arrest threats



Emma Barraclough, London, and Alli Pyrah, New York


The long-running legal battle between InterDigital and Huawei took a new twist this week after InterDigital claimed its representatives were threatened with arrest by China’s antitrust authorities.

InterDigital, a California-headquartered company that licenses its portfolio of wireless-related technologies to telecoms companies, says it was told that China’s National Development and Reform Commission (NDRC) “couldn’t guarantee the safety of” its executives if they attended a meeting scheduled for yesterday.

This latest move by the NDRC comes after a series of patent battles between InterDigital, which is valued at about $1.3 billion, and Huawei, China’s leading telecoms equipment company.

InterDigital revealed in a securities filing on October 31 that it is being investigated for alleged antitrust violations by the NDRC.

A spokesman for the company told Managing IP that on December 10, the NDRC requested a meeting with its chief executive officer William Merritt in Beijing on December 18.

The spokesman said InterDigital told the NDRC that Merritt could not travel to Beijing at such short notice and that the company would send other executives in his place.

He said the NDRC then informed InterDigital through its Chinese counsel that its executives might be arrested or detained.

“To this date, we have cooperated fully with the NDRC’s investigation of our company, and continue to believe that we have done absolutely nothing wrong,” the company said in a statement. “However, we are simply unable to comply with any investigation that is accompanied by a threat to the safety of our executives.”

According to Reuters, InterDigital chief executive officer Merritt said in a letter to Chinese officials that the NDIC had told InterDigital it is being investigated because it filed a complaint about Chinese companies infringing on its patents with the US International Trade Commission (ITC).

InterDigital has asked the ITC to block imports of Huawei’s products into the US, and Huawei has complained to the European Commission about InterDigital’s patent licensing strategies.

InterDigital and Huawei have also squared up before the Chinese courts. In October, Guangdong High Court affirmed a trial court's ruling that InterDigital abused its market position, after Huawei accused it of breaching China’s Anti-Monopoly Law when it attempted to license standards-essential patents involving 2G and 3G data transmission.

The court ordered a damages award of Rmb20 million ($3.3 million) and set a royalty rate for the patents – a rare example of courts taking an active role in FRAND cases. The decision is included in Managing IP’s list of the 40 most important cases of 2013.

China’s NDRC appears to be taking a tougher approach against companies it suspects of violating the country’s antitrust rules. Last month it began an investigation into the activities of semiconductor company Qualcomm. The California-based company said it is not aware of any charge by the NDRC that Qualcomm has violated the Anti-Monopoly Law.


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