UPDATE: Huawei, Motorola Settle Lawsuits Over Intellectual Property

Huawei Technologies Ltd. and Motorola Solutions Inc. (MSI) said Wednesday that they had settled their respective lawsuits against each other over intellectual property, paving the way for Motorola to complete the sale of its network-equipment business.

Motorola separately disclosed that it would lower the sale price of the business to Nokia Siemens Networks to $975 million from $1.2 billion.

The settlement between Motorola and Huawei removes one roadblock from Motorola's attempt to sell the assets, which has been held up largely because of Huawei's accusation that Motorola is improperly selling a business that used its technology. For the Chinese telecommunications-equipment maker Huawei, the deal is a win as the company gets paid for technology to be transferred over to Nokia Siemens, and it gets dropped from a suit alleging that it conspired with former Motorola employees to steal intellectual property.

The terms of the deal weren't disclosed, but Motorola will pay Huawei a one-time fee, and Huawei in turn will allow the network assets to be sold to Nokia Siemens Networks. The two agreements were negotiated separately, and the fee that Motorola will pay to Huawei is lower than the $225 million reduction in Nokia Siemen's purchase price.

The deal is still being held up by Chinese regulators. Motorola said it expects to close the deal on April 29.

For Huawei, the fee is a demonstration of the strength and integrity of the company's intellectual property, according to Bill Plummer, vice president of government affairs for Huawei USA.

"It's a clear vindication of Huawei, our brand, our legal claims and our business practices," he said.

Huawei continues to fight the perception that it has ties to the Chinese government and military, something it has denied. Yet its efforts to enter the U.S. market has met with resistance from legislators, who have already derailed multiple deals.

Since 2001, Huawei has supplied wireless equipment that used a technology called GSM, which Motorola resold in areas outside of the U.S. Under the settlement, the commercial agreements with Huawei will be transferred to Nokia Siemens.

"With the resolution of these cases, and the misunderstandings put to rest, Huawei is pleased to move forward with its efforts to provide innovative solutions to its customers," Guo Ping, vice chairman of the board and executive vice president of Huawei, said in a joint statement.

Motorola Chief Executive Greg Brown said, "After reviewing the facts, we decided to resolve these matters and return to our traditional relationship of confidence and trust."

Nokia Siemens recently came back to Motorola seeking to renegotiate the terms of the deal, which was originally announced in July and was initially expected to close by the end of last year. Motorola and Nokia Siemens agreed to fewer closing conditions, further easing the way to completing the transaction. The deal had been delayed twice due to the Huawei lawsuit and additional review by the Chinese authorities.

Brown said in an interview last week that he and Nokia Siemens were committed to the deal, and reiterated his goal of closing the transaction by the second quarter.

Motorola, which makes public radio systems and enterprise computing devices, has had to wrestle with this lingering issue even as it attempts to focus on its core businesses. At the beginning of the year, it split with Motorola Mobility Holdings Inc. (MMI), which makes smartphones and cable set-top boxes.

Nokia Siemens is a joint venture between Nokia Corp. (NOK, NOK1V.HE) and Siemens AG (SI, SIE.XE).

Motorola shares rose 1% to $44.32.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com

Motorola Solutions (NYSE:MSI)
Historical Stock Chart
From May 2024 to Jun 2024