Senators Introduce Bill Restricting Huawei From Buying, Selling U.S. Patents -- Update
July 18 2019 - 4:39PM
Dow Jones News
By Sarah Krouse and Kate O'Keeffe
Republican senators introduced legislation on Thursday aimed at
blocking Huawei Technologies Co. from buying or selling U.S.
patents in the latest action by Washington targeting the Chinese
telecom giant.
The bill sponsored by Sens. Marco Rubio (R., Fla.) and John
Cornyn (R., Texas) seeks to enable the federal government to block
companies on a U.S. government trade blacklist from buying, selling
or exclusively licensing U.S. patents, according to draft text
reviewed by The Wall Street Journal.
The sponsors said the legislation is aimed at Huawei, which is
aggressively pursuing U.S. patent claims and which the Commerce
Department in May added to its "entity list," citing
national-security concerns. The blacklist prevents companies from
supplying U.S. technology to the firm without a license.
Huawei is pressing Verizon Communications Inc. to pay licensing
fees for more than 200 of its patents, the Journal has reported.
The tactic is seen by some in Washington as retaliation against
U.S. policy makers' crackdown on the Chinese firm, which is the
world's biggest telecom gear maker and has become a central
sticking point in the U.S.-China trade talks.
Huawei has repeatedly denied U.S. claims that it poses a
security risk. In a statement Thursday, Andy Purdy, chief security
officer for Huawei Technologies USA, said the proposed legislation
attacks the fundamental rights of patent holders to protect their
own intellectual property, a right that is recognized and exercised
under U.S. law and international convention."
"If adopted, it could have severe negative ramifications by
creating global mistrust of the U.S. and its ability in upholding,
as well as safeguarding intellectual property rights," Mr. Purdy
said in a statement.
The blacklisting of Huawei rattled Chinese leaders, who want
U.S. restrictions eased as a precondition for any trade agreement
with the U.S. In a concession to China's President Xi Jinping,
President Trump said last month that he would allow U.S. firms to
resume selling products to Huawei that don't pose a security
threat. After that, Mr. Rubio and others introduced legislation
seeking to block any such relaxation of restrictions.
The new bill would give the federal government the power to
intervene in any domestic patent infringement case involving an
entity on the Commerce Department's list.
When such a patent-infringement case is filed, the bill would
require the company on the black list to notify the Justice
Department and Patent and Trademark Office. The company would also
have to provide information on the alleged infringement, the
financial implications of it and the damages sought in the
case.
Congress should stop Huawei from "using patent troll tactics and
weaponizing the U.S. legal system against American companies in
retaliation for the Trump administration's efforts to protect our
nation and the future of 5G," Mr. Rubio said in a statement,
referring to next-generation wireless service.
Verizon is the largest U.S. wireless carrier by subscribers and
isn't a Huawei customer.
The patents at issue span core network equipment, wireline
infrastructure and internet-of-things technology, which means the
matter impacts several of Verizon's vendors.
The largest U.S. carriers have all been restricted from using
Huawei equipment in their networks since 2012 and federal officials
have pressed allies to eschew the company's products in their
next-generation networks.
Carriers around the world are racing to upgrade their networks.
U.S. national security officials have told senior
telecommunications executives that they are concerned the continued
strengthening of Huawei as an equipment maker could weaken smaller
rivals such as Nokia Corp. and Ericsson AB. That, in turn, could
eventually limit choices for large carriers buying
radio-access-network gear such as base stations and antennas.
Huawei's rival gear makers have long alleged that it has
benefited from copying and stealing intellectual property. The Wall
Street Journal has reported that the company's culture has blurred
the boundary between competitive achievement and ethically
questionable methods of winning business.
Write to Sarah Krouse at sarah.krouse@wsj.com and Kate O'Keeffe
at kathryn.okeeffe@wsj.com
(END) Dow Jones Newswires
July 18, 2019 16:24 ET (20:24 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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