InterDigital Trying to Boost Patents’ Price, Huawei Tells ITC

InterDigital Inc., owner of about 1,300 U.S. mobile-phone patents, filed infringement claims with a U.S. trade panel last month to boost the price of its intellectual property portfolio, Huawei Technologies Co. said.

InterDigital “may be using the commission’s investigation process purely for the purpose of inflating its value as it prepares to sell its IP assets,” Huawei said in an Aug. 5 letter to the U.S. International Trade Commission in Washington.

InterDigital said July 19 it was considering a sale of its patent portfolio. The company filed a complaint with the ITC on July 26 that accused Huawei, Nokia Oyj (NOK1V) and ZTE Corp. (763) of infringing seven patents related to so-called third-generation wireless technology.

In its complaint, King of Prussia, Pennsylvania-based InterDigital asked the panel for an order that would block U.S. imports of mobile phones containing the disputed technology. All three companies sent letters to the commission saying such an action would not be in the public’s interest.

There is a “distinct possibility that InterDigital is using the Commission’s proceeding simply to inflate the value of its patent holdings with no likely benefit to the kind of domestic industry intended to be protected by the statute,” Sturgis Sobin of Covington & Burling in Washington wrote on behalf of Shenzhen, China-based Huawei.

The companies asked that the judge assigned to the case gather evidence on the public implications of a ruling in InterDigital’s favor. The ITC has not yet picked a judge.

‘Good Faith Efforts’

In a July 26 statement, InterDigital said it filed the complaint after “good faith efforts” to reach a licensing agreement failed. When asked about the new filings, Jack Indekeu, a spokesman for InterDigital, said the company doesn’t comment on litigation.

“It makes little sense for the ITC to protect entities that use patent litigation to compel prelitigation settlements and use the ITC to drive up settlement amounts,” ZTE, also based in Shenzhen, wrote in its filing. ZTE and Huawei are China’s two largest makers of phone equipment.

Nokia, based in Espoo, Finland, won an earlier ITC case filed by InterDigital over other patents and is awaiting an appeals court ruling in that dispute.

InterDigital has hired Evercore Partners Inc. (EVR) and Barclays Capital to help explore a potential sale to take advantage of increased demand for wireless patents. InterDigital, whose stock has risen more than 50 percent since the July 19 announcement, has said its patents are deeper and stronger than those that Nortel Networks Corp. auctioned for $4.5 billion in bidding concluded June 30.

Samsung Electronics Co., Apple Inc. (AAPL) and Google Inc. (GOOG) have been named as potential bidders for the InterDigital patents.

The case is In the Matter of Certain Wireless Devices with 3G Capabilities and Components Thereof, Complaint No. 2835, U.S. International Trade Commission (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

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