Market Overview

Vringo Goes After Chinese Telecom Giant ZTE Corporation for IP License Payments


Earlier today Vringo (NYSE: VRNG) filed an 8-k with the SEC challenging ZTE to license patents for technology ZTE has been using since 2002. The patents cover Vringo's proprietary technologies that are considered essential to infrastructure equipment and mobile stations compliant with GSM and GPRS specifications. In the SEC filing Vringo further states that if ZTE does not pay for the right to use its patents, Vringo will pursue all legal remedies available.

ZTE reported making over $11 Billion US dollars (RBM 93 Billion) from its infrastructure and handset business in 2011 alone.

Despite having declared it own patents to international standards for others to license, ZTE has ignored paying for licenses to patented technology it uses in its own products.

In January this year ZTE settled with Ericsson for $676 million and an ongoing license with undisclosed amounts going forward.

Vringo has over 500 patents and patent applications which were acquired from Lycos, Inc. and Nokia (NYSE: NOK), and developed internally.

  • In August, Vringo acquired a portfolio of patents for nokia that cover cellular infrastructure, including communication management, data and signal transmission mobility management, radio resource managment and services.
  • Some of the acquired patents have been declared essential by Nokia to wireless communications standards such as 3G and 4G and related technologies and included GSM and WCDMA

Given that U.S. courts have clearly been kind to American companies whose patents have been infringed by foreign firms, with Apple (NASDAQ: AAPL) being awarded over $1 billion in a settlement against Samsung (OTC: SSNLF), Vringo seems to have some leverage over ZTE to pay up, or have the battle in court.

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