Verizon Communications (NYSE:VZ)
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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 firstname.lastname@example.org and Kate O'Keeffe at email@example.com
(END) Dow Jones Newswires
July 18, 2019 16:24 ET (20:24 GMT)
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