Huawei 2013 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2013 Huawei annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 146

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146

98 Notes to the Consolidated Financial Statements Summary
(b) Contingencies
i) In July 2011, InterDigital Corporation (“IDC”)
filed a complaint with the United States
International Trade Commission (the “USITC”
or “Commission”) and the United States District
Court for the District of Delaware against
Huawei Technologies Co., Ltd. (“Huawei
Tech”) and Futurewei Technologies Inc.
(“Futurewei”), both wholly-owned subsidiaries
of the Company. The complaint alleged that
sales of imported 3G wireless devices by the
said subsidiaries within the United States
had infringed IDC’s 3G wireless patents and
requested for issuance of exclusion order
and cease and desist order in relation to the
accused 3G wireless devices concerned (“the
first complaint”).
In December 2011, Huawei Tech filed a
complaint against IDC in the PRC for violation
of the fair, reasonable, and non-discriminatory
(“FRAND”) policies and the PRC’s Anti-
Monopoly Law. In June 2012, Huawei Tech
filed another complaint with the European
Commission (the “EC”) to request an
investigation into the licensing fees requested
by IDC, which it deemed exploitative,
discriminatory, and in violation of the FRAND
policies as well as the EC’s antitrust law.
On January 2, 2013, IDC filed another two
complaints with the USITC and the United
States District Court for the District of Delaware
against Huawei Tech, Futurewei, and Huawei
Device USA Inc. (“USA Device”), another
wholly-owned subsidiary of the Company. The
complaints further alleged that the sales of
certain 3G and 4G wireless devices sold by the
said subsidiaries within the United States had
infringed three of IDC’s other patents.
On February 4, 2013, the Shenzhen Intermediate
People’s Court ruled that IDC had violated
the PRC’s Anti-Monopoly Law and ordered
IDC to compensate the Group for damages of
CNY20 million. The Court also ruled that the
royalty rates licenses to Huawei Tech for IDC’s
Chinese essential standard patents in wireless
communication should not exceed 0.019% of
the actual sales prices of Huawei Tech’s wireless
devices.
On March 11, 2013, IDC filed appeals to the
Guangdong Higher People’s Court in respect of
the rulings made by the Shenzhen Intermediate
People’s Court. On October 25, 2013, the
Guangdong Higher People’s Court upheld the
Shenzhen Intermediate People’s Court’s ruling
which is the final ruling.
On June 28, 2013 and December 19, 2013,
the USITC ruled in favor of Huawei Tech,
Futurewei and USA Device in respect of the
first complaint in the initial determination and
the final determination, respectively.
On December 23, 2013, Huawei Tech,
Futurewei and USA Device reached a settlement
agreement with IDC to withdraw or dismiss all
the ongoing legal actions against each other.
Under the settlement agreement, the parties
will solve their dispute through arbitration.
At this stage, the Group is unable to predict
the outcome of the litigation, or reasonably
estimate a range of possible loss, if any, given
the current preliminary status of the litigation.