ZTE v. Samsung - Postscript
- Marta Beckwith
- 12 hours ago
- 3 min read
I have been writing about ZTE a lot recently in my mini-series about the ZTE/Samsung dispute. See, Courts That "FRAND" Differently: Part 1, Courts that “FRAND” Differently Part 2: Lessons To Be Learned and Courts That "FRAND" Differently Part 3. But, until my recent post about Avanci, I had forgotten that ZTE was a founding member of Avanci back in 2016.
ZTE’s role in setting up Avanci in 2016 calls into question ZTE’s narrative in the Samsung cases that it, and thus its 2018 licenses, were “severely affected” by the 2017 U.S. trade sanctions. Recall that the U.S. trade sanctions against ZTE were issued in 2017 after ZTE pled guilty both to doing business with Iran and North Korea and to lying to the U.S. government about it.[1] So the sanctions were not issued until after ZTE participated in founding Avanci.
Given this history, here are some questions that I now wish had been examined and addressed in the Samsung cases:
How much revenue did ZTE make from licensing through Avanci? Does that amount call into doubt the legitimacy of ZTE’s claims that it was on the financial brink in 2018?
How much did ZTE agree to accept in 2016 (before the sanctions) from allowing Avanci to license its portfolio, i.e. what was in the agreement between ZTE and Avanci? Has that amount varied over the years since Avanci was founded? If so, by how much and why? Does it vary by industry sector being licensed?
What rates did ZTE actually receive each year from Avanci for its SEP portfolio? How do those rates compare with the rates ZTE got from its own licensing efforts in each year since 2016?
Did ZTE, in fact, get a lower rate for its 2018 licenses than it agreed to accept from Avanci for the same portfolio in 2016, and if so by how much? Or, did ZTE get a higher rate for the 2018 licenses than it agreed to accept from Avanci in 2016? Or the same rate?
Did the rates that ZTE agreed to accept from Avanci in 2018 differ from what it agreed to accept in 2016, e.g. was ZTE really so hard pressed in 2018 from the sanctions that it agreed to accept less from Avanci?
If ZTE received more to license the same ZTE SEP portfolio through Avanci than ZTE got through its own efforts, why didn’t ZTE expand the scope of its use of the Avanci platforms to license its patents?
Did ZTE not do so because it wanted a bilateral license with Samsung and Apple, and does that not reflect that ZTE placed a higher value on the incoming license than it told the courts?
ZTE remains a member of the Avanci licensing platform. How do the rates that ZTE received, and what it agreed to accept, from the Avanci platform in 2024 compare with the rates ZTE demanded from Samsung and others in 2024?
While answers to these questions might not have been dispositive of ZTE’s veracity in the Samsung cases, at a minimum they would have helped to illuminate that veracity. Certainly the truthfulness of a company that has pled guilty to lying to the U.S. government and which took “several steps to conceal relevant information” should be tested on at least a reasonable standard of proof before any court awards it hundreds of millions of dollars based on its “woe is me” claims about the 2018 licenses.
