Huawei has hit upon a new strategy for fighting back against the US: leveraging its massive suite of technology patents to try and force American competitors to fork over billions of dollars. And its first target is Verizon, one of its biggest American competitors in the race to become a global leader in 5G.
As Reuters reports, Huawei has told Verizon that it should pay licensing fees amounting to more than $1 billion for the more than 230 patents held by the Chinese telecoms giant.
The plan has been percolating since before the White House blacklisted Huawei: Verizon should pay to “solve the patent licensing issue,” a Huawei intellectual property licensing executive reportedly wrote in February.
The patents cover networking equipment for more than 20 of Verizon’s vendors, and those vendors would, in theory, indemnify Verizon. Some of these firms have been approached directly by Verizon. They range from core networking equipment and wireline infrastructure to IoT technology, according to sources cited by WSJ.
For nearly a year now, Washington has been lobbying its allies to block Huawei equipment from being used in their 5G networks. That feud intensified in December, when Canadian authorities arrested Huawei’s CFO, Meng Wanzhou, at the behest of the DoJ. The DoJ is now seeking to extradite the Huawei executive over allegations she lied to banks about Huawei’s relationship with certain affiliates in order to help the company circumvent American sanctions on Iran. Washington’s biggest complaint to its allies is that Huawei is bound by Chinese law to help state intelligence spy on foreign governments and civilians, if asked. Beijing and Huawei have denied this, but evidence of ‘back doors’ in Huawei equipment has been uncovered in the US and in Europe.
Verizon and the other companies have reportedly notified the US government about Huawei’s demands, which they suspect are motivated by the ongoing feud between Huawei and Washington.
A spokesman for Verizon declined to comment to Reuters, claiming it’s a sensitive legal matter. Though he did say that the issue is “bigger than just Verizon.”
“These issues are larger than just Verizon. Given the broader geopolitical context, any issue involving Huawei has implications for our entire industry and also raise national and international concerns.”
Of course, given Chinese companies’ well-documented history of stealing American technology either via forced technology transfers in exchange for access to the Chinese market, or straight-up corporate espionage, the irony in Huawei’s demands is more than a little ironic.
It’s likely that Huawei and Beijing understand the hypocrisy in Huawei’s demands. It’s even more likely that they don’t care, since, once the 90-day reprieve from the White House black list ends, Huawei’s business is going to be in serious jeopardy.