ZTE, Ericsson to Withdraw Lawsuits Against Each Other

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

The companies are awaiting 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. Stockholm-based Ericsson said in a separate statement that the two parties agreed to drop all litigation and signed a global cross-licensing agreement.

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 lawsuits filed by Ericsson against ZTE in the U.K., Germany and Italy, and a lawsuit filed by ZTE against Ericsson in China.

ZTE, based in Shenzhen, rose 2.3 percent to close at HK$22.55 in Hong Kong. The shares yesterday 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 Patents

Ericsson, the world’s largest maker of wireless phone networks, said in April that it filed lawsuits against ZTE in Europe, in connection with alleged infringement of several handset and network technology patents.

“Ericsson has the strongest patent portfolio in the industry with over 27,000 patents and any company which sells mobile devices or systems needs a license from Ericsson,” Kasim Alfalahi, chief intellectual property officer at Ericsson, said in the statement. “We have signed more than 90 patent agreements with different vendors worldwide. Now we can add ZTE to this group.”

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.”

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