Huawei revs up patent-licensing biz with lawsuit against Netgear

China's Huawei is suing Netgear in Germany and China, arguing the San Jose, California-based Wi-Fi equipment vendor is infringing on some of Huawei's patents.

The move appears to be the latest effort by the Chinese technology giant to wield its massive patent portfolio as a weapon to generate more revenues. And that's noteworthy considering Huawei continues to suffer under US trade restrictions amid an increasingly contentious geopolitical relationship between the US and China.

According to a recent Netgear SEC filing, Huawei began its assault in March. The company's lawsuits allege some of Netgear's Wi-Fi 6 products infringe on Huawei's standard-essential patents (SEPs) for Wi-Fi.

"The company, at this time, is not able to reasonably estimate any financial impact to the company resulting from these litigation matters," Netgear wrote in its filing. "The company does not believe that it is reasonably possible that a material loss has been incurred for any of the matters disclosed above, and consequently has not established any loss provisions."

To be clear, such patent-infringement lawsuits are extremely common in the technology sector broadly, and in the communications market specifically. In fact, Nokia's recently announced patent-licensing agreement with Apple is notable only because it didn't appear to involve the kind of contentious, globe-spanning lawsuits that preceded a similar agreement between Apple and Ericsson.

But the dustup between Huawei and Netgear is important because the Chinese company historically hasn't pursued patent-licensing as a business in the way that Nokia and Ericsson have, according to CNBC.

A shifting landscape

Huawei of course is no stranger to the power of patents. "Huawei is an industry leader in patents in multiple mainstream standards fields, including mobile communications, short-distance communications, and video codecs. Hundreds of companies use our patented technologies through agreements or patent pools," according to the company's recent annual financial report.

Continued Huawei: "In 2022, 29 companies from China, the US, Europe, Japan, South Korea, and a number of other countries and regions entered into new licensing agreements with Huawei to pay for the use of the company's patented technologies."

Huawei's focus on patents comes amid ongoing troubles in its core smartphone and networking businesses. Specifically, Huawei's earnings plummeted two-thirds last year as its efforts to find growth have sharply squeezed profitability.

Thus, Huawei may be looking for the kinds of revenues that rivals like Nokia and Ericsson generate from their own patent-licensing businesses. For example, Ericsson said in its most recent quarterly financial report that its IPR (intellectual property) licensing revenues generated $228 million.

As Huawei pursues a similar business, the company is becoming increasingly litigious. Other international companies to receive patent-infringement lawsuits from Huawei include Stellantis, Xiaomi, Amazon and Verizon.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano