ZTE, Ericsson to Withdraw Lawsuits Against Each Other

ZTE Corp. (000063), China’s second-largest maker of phone equipment, said it and Ericsson AB (ERICB) agreed to withdraw patent lawsuits against each other.

The companies are waiting for court approval to end the suits, ZTE said in a statement to the Shenzhen Stock Exchange yesterday. ZTE also denied that it was ordered to pay 500 million euros ($647 million) to Ericsson and was banned from entering the European market, according to the statement.

After “extensive discussion and consultation,” the companies “have agreed to withdraw all patent infringement litigations against each other,” ZTE said in the statement. This includes “the patent infringement lawsuits filed by Ericsson against ZTE in the U.K., Germany and Italy, as well as the patent infringement lawsuit filed by ZTE against Ericsson” in China.

The Shenzhen-based company rose 2.3 percent to close at HK$22.55 in Hong Kong. The shares yesterday had posted their biggest decline in five months, prompting the company to issue a statement that it was “not aware of any reason” for “recent decreases in the price and increases in the trading volume.”

Ericsson, the world’s largest maker of wireless phone networks, said in April that it filed lawsuits against ZTE in the U.K., Germany and Italy, in connection with alleged infringement of several handset and network technology patents. Fredrik Hallstan, a spokesman for Stockholm-based Ericsson, had no immediate comment on yesterday’s ZTE statement.

ZTE smartphone sales may double this year as they gain market share in Europe, North America, Brazil and Japan, the company said last week.

That expansion in handsets may damp profit as the company subsidizes purchases of the devices, said Bill Fan, an analyst at Guosen Securities Co. in Hong Kong, which rates the shares “buy.”

To contact Bloomberg News staff for this story: Bloomberg News in Shanghai at emailtv@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net; Winnie Zhu in Shanghai at wzhu4@bloomberg.net

To contact the editor responsible for this story: Joshua Fellman at jfellman@bloomberg.net

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