InterDigital execs fear arrest, won't meet China antitrust agency

(Reuters) - InterDigital Inc, a U.S. patent licensing firm, says its executives will not attend a meeting with Chinese antitrust authorities in Beijing on Wednesday because it fears they will be arrested.

China’s powerful National Development and Reform Commission (NDRC) is investigating InterDigital for violating Chinese anti-monopoly law, the company said in a securities filing on October 31.

The NDRC told InterDigital it had initiated the investigation because the company had filed a complaint to the U.S. International Trade Commission against Chinese companies, alleging patent infringement, InterDigital said in a letter addressed to Chinese officials that was seen by Reuters.

The company has been locked in a legal battle over patent royalty rates it has been seeking from Chinese network equipment maker Huawei Technologies.

NDRC officials were not immediately available for comment on the investigation, which InterDigital says it has fully cooperated with until now.

“We are simply unable to comply with any investigation that is accompanied by a threat to the safety of our executives,” InterDigital Chief Executive William Merritt said in a statement on Monday.

InterDigital, which has a market capitalization of about $1.3 billion, makes money from licensing its portfolio of technology patents.

The NDRC has been stepping up its anti-monopoly enforcement this year. The agency handed down record fines to six milk powder companies, including Mead Johnson Nutrition Co and Danone, and has also punished domestic jewelers for antitrust violations.

It is also investigating Qualcomm Inc, another large U.S. holder of mobile patents.

In October, the Guangdong High Court awarded Huawei 20 million yuan ($3.3 million) after a legal battle between the Chinese network gear maker and InterDigital.

Shenzhen-based Huawei claimed InterDigital charged it a royalty rate far above what it obtained from Apple Inc and Samsung Electronics Co Ltd.

InterDigital said it expects the U.S. trade agency verdict on its complaint be issued on December 19, a day after the scheduled meeting with the Chinese authorities.

Chinese officials want to meet Merritt, but he replied in the letter to the NDRC that he was unable to attend the meeting because of a company board meeting.

In the letter, the company said its Chinese lawyer was told by NDRC that it would not ensure the safety of executives it planned to send to China in place of Merritt and they may be arrested or detained.

InterDigital is also involved in a regulatory row in the United States, where it is a member of an alliance of patent holders opposed to a bill in Congress aimed at reining in “patent trolls,” companies that buy or license patents from others then seek licensing fees from technology companies.

Reporting by Sakthi Prasad in Bangalore; Editing by Rodney Joyce, Ted Kerr and Michael Urquhart