President Trump’s dispute with China has landed on the doorstep of Verizon, with Huawei demanding that the American wireless giant pay licensing fees on hundreds of patents, according to two people briefed on the matter.
Huawei, one of China’s largest technology companies and the world’s biggest supplier of networking equipment, accused Verizon in a letter this spring of violating 238 of its patents, the people said. They would speak only on the condition of anonymity because the issue was considered a potential legal dispute.
The letter, earlier reported in The Wall Street Journal, represents a new wrinkle in the tensions between the Trump administration and China.
Mr. Trump has appeared to use Huawei as a bargaining chip in his trade war with China. Last month, he signed an executive order that banned the purchase of equipment from companies posing a national security threat. That includes gear from Huawei, because of its ties to the Chinese government. Huawei officials have denied that it is a security risk and has accused the Trump administration of unfairly targeting the company’s products.
In the letter, dated March 29, Huawei wrote to Verizon that “we trust you will see the benefits to taking a license to our patent portfolio,” according to one of the people briefed on the matter. The two companies have exchanged several emails and phone calls since and met as recently as last week in New York to discuss Huawei’s claims. Licenses can be paid on a per-subscriber basis, typically as a percentage of certain sales.
Huawei has been shut out of the American smartphone market for years, and the patent claim is a way for the Chinese tech giant to try to extract some revenue from American companies, the two people familiar with the letter said.
Verizon doesn’t buy any Huawei products but relies on over 20 vendors that use technology owned by the Chinese telecommunications giant. Huawei’s patent claim covers a variety of properties, including networking devices and wireless technology. Added up, Huawei’s claims would exceed $1 billion in fees, the people said.
A spokesman for Verizon, Richard Young, said the company had no comment on the letter. But, he said, “these issues are larger than just Verizon.”
Mr. Young added, “Given the broader geopolitical context, any issue involving Huawei has implications for our entire industry and also raise national and international concerns.”
Huawei did not respond to a request for comment.
The company, in addition to its popular networking equipment, supplies smartphones to 170 nations. The company has become a totem of China’s recent technological prowess.
But the recent executive order from Mr. Trump effectively crippled Huawei on a number of fronts, because it prevents American businesses from selling software or hardware components to the company. Huawei’s smartphones, for example, rely on Google’s Android operating system.
A few weeks later, Beijing hit back. It warned executives at American tech giants such as Microsoft and Dell that they faced retribution if they cooperated with the Trump administration’s ban on sales of American technology to Chinese companies.
Huawei has mounted a legal challenge to American limits on purchases of its equipment, suing the federal government, saying it had been unfairly and incorrectly banned as a security threat.
Huawei’s chief legal officer, Song Liuping, laid out the company’s position for the motion in an op-ed in The Wall Street Journal in May. Around that time, Mr. Song added to the company’s argument at a news conference at its headquarters in Shenzhen.
“The U.S. government has provided no evidence to show that Huawei is a security threat,” he said. “There is no gun, no smoke. Only speculation.”
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