Sept. 29 (NBD) –Shenzhen Transsion Holdings Co Ltd (Transsion), a Chinese handset maker known for its dominance in Africa, was sued by Huawei for intellectual property infringement on the eve of its IPO on China's Nasdaq-like STAR Market, according to a media report on Saturday.

A notice from Shenzhen's Intermediate People's Court showcased Huawei sued Transsion and five of its subsidiaries last Monday for issues related to copyrights ownership and patent infringement, but further details weren't revealed. 

With regard to the case, Huawei declined to comment. A person with Transsion responded that they have seen the media coverage and would be keeping an eye on the issue.

Tecno Mobile, a smartphone brand under Transsion [Photo/Tan Yuhan (NBD)]

National Business Daily (NBD) noticed that the case came at a time when Transsion is slated to begin trading on the STAR Market. When asked about whether the company will go public on Monday as scheduled, the person at Transsion didn't reply.

Yang Zhaoquan, a lawyer at Beijing Vlaw Law Firm, noted the impact of the lawsuit will be largely determined by the claim amount, importance of involved technologies and the sufficiency of proof of infringement. But a source familiar with the lawsuit disclosed that technologies involved are not that significant and the claim amount is not great. The case could be a warning from Huawei, the source added. 

If the IPO process wasn't affected, the stock price of Transsion would possibly take a hit, predicted Wang Jiayi, a lawyer at Guangdong-based Guanghe Law Firm.

NBD observed that intellectual property has long been a frailty of Transsion. The prospectus showed that Transsion and its subsidiaries obtained 630 patents and 286 software copyrights, which dwarf in comparison to other handset manufacturers. For example, Huawei has over 100,000 patents while Oppo holds over 38,000.

According to researcher Li Junhui at the institute for intellectual property of China University of Political Science and Law, Transsion will face increasing risks if it ventures into the smartphone segment.

Dubbed the "king of Africa", the Shenzhen-based handset maker gained its dominance on the continent based on strong sales of feature phones, which mainly use 2G patents exempted from royalty fees. But things are different in the smartphone sector as an increasing number of 3G, 4G and 5G technologies and patents will be employed. 

"More smartphones (in the company's product portfolio) stand for more potential expenses on patents," Li explained.  

Specifically speaking, a smartphone maker pays Qualcomm 3.25 percent of the cost of a smartphone as royalty fees, and the proportion will extend to 8-10 percent if potential patent fees to NPEs (non-practicing entities) is included.

In the future, patent will be the most crucial weapon in the battlefield of smartphone makers. "To stand out, Transsion needs to enlarge investments to support both the development of self-developed technologies and patent acquisition," suggested Li.

In fact, Transsion is not the first handset maker that has been involved in such disputes. In 2012 Apple filed a lawsuit against Samsung for patent infringement. The battle, which aroused heated discussions, lasted for as long as six years and closed with Samsung being ruled to pay 539 million U.S. dollars to Apple.

Email: lansuying@nbd.com.cn