source from:WSJ
TECH
Qualcomm Sues Alibaba-Backed Smartphone Maker Meizu for Patent Infringement
U.S. chip maker files complaint against Chinese smartphone maker over alleged violation of intellectual property



By JURO OSAWA
Updated June 24, 2016 9:57 a.m. ET
2 COMMENTS
HONG KONG—Qualcomm Inc. is suing a Chinese smartphone maker backed by online-shopping giant Alibaba Group Holding Ltd., in the latest patent-infringement case involving technology companies.


The U.S. chip maker said it has filed a complaint in a Beijing court against Meizu Technology Co. over its alleged violation of intellectual property.


Qualcomm’s litigation against Meizu, in which Alibaba holds a stake, is part of the U.S. company’s attempt to protect its licensing business in the world’s largest smartphone market, where it has faced regulatory challenges in recent years including an antitrust investigation by Beijing. Since Qualcomm reached a settlement with Chinese authorities last year and agreed to pay a fine, the chip maker has signed patent-licensing agreements with a number of Chinese clients, including Huawei Technologies Co. and Xiaomi Corp.


“Meizu is choosing to use [Qualcomm’s] technologies without a license, which is not only unlawful, but is unfair to other licensees that are acting in good faith and respectful of patent rights, and ultimately damaging to the mobile ecosystem and consumers,” said Don Rosenberg, executive vice president and general counsel of Qualcomm, in a statement.


Qualcomm said it had negotiated with Meizu to sign a licensing agreement, but the Chinese company was unwilling to do so, prompting the U.S. firm to take legal action. For Qualcomm, technology licensing is a crucial part of its business, accounting for more than half of its profit.




“Meizu has always been staying in close communication with Qualcomm on the patent issue, and has conducted several in-depth discussions with them. We respect Qualcomm’s right to take legal action if they’re not satisfied with the business negotiation,” Meizu Vice President Li Nan wrote on his official page on the WeChat messaging application. If Qualcomm wanted to resume their discussions, Meizu would welcome it, Mr. Li added.


An Alibaba spokeswoman declined to comment.


‘Meizu is choosing to use [Qualcomm’s] technologies without a license.’

—Don Rosenberg, executive vice president and general counsel of Qualcomm

Meizu, a closely held company based in the southern city of Zhuhai, is one of many Chinese smartphone makers offering devices with high-end features at bargain prices. Last year, Alibaba invested $590 million in Meizu, without disclosing the exact size of its stake.


The latest legal dispute comes as patent battles heat up in China among domestic and international competitors. Shenzhen Baili, a little-known Chinese startup that barely exists, has won a surprise injunction against sales of Apple’s iPhone 6 and iPhone 6 Plus in Beijing, based on a design-related patent it claims to own in China. Last month, Chinese telecommunications giant Huawei, the world’s third-largest smartphone maker, sued Samsung Electronics Co. in China and the U.S., claiming that the South Korean smartphone giant violated 11 of its mobile patents.