Huawei, InterDigital enter licensing pact, end patent litigation; InterDigital surges

(Reuters) - InterDigital Inc, a developer of digital mobile and video technology, said on Tuesday it has entered a worldwide patent licensing agreement with China’s Huawei Technologies Ltd, and that the companies have settled all litigation against each other.

FILE PHOTO: A cameraman records during Huawei stream product launch event in Barcelona, Spain February 24, 2020. REUTERS/Nacho Doce

Shares of InterDigital rose as much as 19.2%.

In a regulatory filing, InterDigital said the licensing agreement runs through 2023, and covers royalties from the sale of some of Huawei’s 3G, 4G and 5G wireless telecommunications products.

InterDigital said the companies have also ended more than 15 months of litigation in China and the United Kingdom.

Huawei had sued InterDigital in January 2019 in the Shenzhen Intermediate People’s Court in China, claiming that the Wilmington, Delaware-based company was licensing its patents on unfair terms, according to a separate regulatory filing.

InterDigital countered in December 2019 with its own action before the High Court of Justice of England and Wales, accusing Huawei of infringing five patents related to industry standards for 3G, 4G and 5G telecommunications.

Talks to renew an earlier Huawei license had broken down, and the UK court would serve as a “neutral venue” to address the dispute, InterDigital said at the time.

Patent royalties accounted for about 96% of InterDigital’s revenue in 2019. InterDigital said a typical royalty might be $1.15 on a 3G or 4G smartphone that costs $500.

Terms to resolve the disputes were not disclosed. Huawei had no immediate comment.

In afternoon trading, InterDigital shares were up $7.85, or 15.7%, at $58.00, after earlier rising to $59.79.

Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis