China protests U.S. politicizing telecom disputes

China has voiced its discontent with the United States for politicizing intellectual property disputes concerning Huawei and ZTE, two leading Chinese telecom equipment makers.

"Intellectual property right is a private right, and we oppose its politicization," State Intellectual Property Office (SIPO) commissioner Tian Lipu told Xinhua on Sunday.

He said Huawei Technologies Co. and ZTE Corp. are leading intellectual property owners in the world IT industry, and main applicants of the world's Patent Cooperation Treaty.

"They are on par with any western multinational corporation in the quantity and quality of owned intellectual property," said Tian. "They comply with international business rules and safety rules in operations."

According to the SIPO, China granted 2,734 invention patents to Huawei and 2,727 to ZTE, in 2012, meaning they were the biggest receivers of invention patents on the Chinese mainland last year.

Tian said "Public policies should take into account social impacts. When intellectual property disputes arise, we should appeal to legal and judicial means and allow businesses to solve the disputes by themselves.

"It is a little ridiculous for the United States to penalize Chinese companies with intellectual properties. It reflects the anxiety and irrationality of some people. I hope they can change such practices."

On Jan. 31, the U.S. International Trade Commission (USITC) initiated a Section-337 investigation into wireless devices from Huawei and ZTE, along with two others based in South Korea and Finland, on the grounds of patent infringement.

The probe was based on a complaint filed by InterDigital Communications and another three U.S. companies in early January.

The complainant accused these companies of infringing its patents related to wireless devices with 3G and/or 4G capabilities, and requested an exclusion order and cease and desist orders, according to the federal bipartisan panel.

Within 45 days, the USITC will set a target date for completing the investigation. Should the complaint be approved, the panel will issue remedial orders, such as a ban on importation of accused products.

Huawei and ZTE responded by denying the patent claims and saying they would actively fight the suit.

In October 2012, the U.S. House of Representatives Intelligence Committee issued a report alleging that Huawei and ZTE pose possible threats to U.S. national security. The committee suggested U.S. companies should avoid buying their equipment from Huawei and ZTE.

Huawei and ZTE were accused of deliberately inserting "back doors" in their products. Back doors are programs secretly inserted by developers, enabling attackers to install malicious software that could paralyze networks and allow hackers to gain entry to highly classified systems.

But an 18-month White House-ordered review on Huawei, indicated no evidence of Huawei espionage was found.

Huawei and ZTC are the second- and fifth-largest telecom equipment makers in the world, respectively. In recent years, they have pursued a foothold in the U.S. market but are accused to be under the control of the Chinese government and have entered the U.S. market through unfair means.

Huawei's products and services are sold in over 140 countries, and it has over 20 research and development centers around the world. It pocketed 15.4 billion yuan (2.44 billion U.S. dollars) in net profits in 2012, up 33 percent year on year. About 66 percent of its revenues came from overseas markets, according to Cathy Meng, the company's chief financial officer.

ZTE, a smaller listed competitor, has estimated losses of 2.5 to 2.9 billion yuan for 2012.