Huawei vs. ZTE: More about reputation than IP infringements

Paul Rasmussen
Court battles are unsightly things. Dirty dealings are alleged, executives are dragged away from their tasks to defend their actions, years can pass before a decision and, regardless of which side eventually wins, the lawyers' fees could settle many a small country's national debt.

All the more extraordinary then that Huawei and ZTE seem intent on entering this dark world by accusing each other of IP and trademark infringements in a number of courts across Europe.

While both sides have robustly defended their positions, the move by Huawei to initiate this legal quarrel is perhaps less focused on a battle over IP and trademarks, and more about strengthening its credibility as a developer of innovative technology.

While Huawei could have taken these actions in the much less public Chinese legal system--with any outcome being seen as having strong political guidance--a ruling in a European court might be judged by Huawei's customer base as being fair and impartial.

A win for Huawei could improve its reputation as an original creator rather than a mimicker.

ZTE probably feels the same, having earlier attempted to resolve Huawei's complaints via negotiation.

But perhaps this was a legal spat waiting to happen. These two highly successful Chinese companies are unusual by having very similar product portfolios, and competing for business in the same markets. The Chinese government has largely managed to persuade its international businesses not to compete against each other, and instead focus on crushing their foreign rivals.

Thus, this move could indicate the two vendors are entering a different phase of their development.

More established infrastructure vendors have suggested that Huawei and ZTE would, at some stage, no longer be able to win deals by undercutting the competition on price. Instead, they would need to offer world-leading technology bolstered by a reputation that operators could wholeheartedly trust and rely upon. --Paul