Huawei 2014 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2014 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 148

  • 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
  • 147
  • 148

97Consolidated Financial Statements Summary and Notes
(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.
On January 12, 2015, the arbitration hearing was
held in the United States to solve the dispute
between Huawei and InterDigital. The arbitration
award is still pending.
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
pending status of the arbitration.
ii) On May 23, 2012, Flashpoint Technology Inc.
("Flashpoint") filed a complaint with the USITC,
requesting the Commission to commence an
investigation under Section 337 of the Tariff Act
of 1930 into certain electronic imaging devices
manufactured by four alleged infringing companies
and their affiliates by reason of patent infringement
and requested for issuance of an exclusion order and
cease and desist order in relation to the electronic
imaging devices concerned. Huawei Tech and
Futurewei were named as respondents. On August
2, 2012, the Administrative Law Judge granted a
joint motion to substitute Huawei Device Co., Ltd.
("Huawei Device") and USA Device for Huawei
Tech and Futurewei. Flashpoint also filed another
complaint before the United States District Court for
the District of Delaware for the same reason against
Huawei Device and USA Device. The legal action
before District Court of Delaware was stayed.