SHANGHAI - A COURT in the eastern Chinese city of Hangzhou has ordered South Korea's Samsung Electronics to compensate a local company for allegedly infringing its mobile phone technology, the official Xinhua News Agency reported on Tuesday.

The Hangzhou Intermediate People's Court ordered Samsung to pay 50 million yuan (S$10.5 million) to Holley Communications after ruling that the Korean company's products used technology patented by Holley that enables mobile phones to work on both GSM and CDMA networks, Xinhua said.

Court officials would not immediately comment on the report, and calls to Holley's offices ran unanswered Tuesday.

Samsung likewise would not comment.

'We haven't received the official notification from the court.' said Lee Eun-hee, a Samsung spokesman in Seoul.

However, South Korea's Yonhap News Agency cited an unnamed official in Seoul as saying that Samsung would appeal if the ruling were against it.

The court ruling, made on Saturday, was a boost for Holley, which claims Samsung sold more than 700,000 mobile phones using technology that the Chinese company patented in 2002, the Xinhua report said.

It said Holley filed its suit against Samsung in April 2007. The Hangzhou court began hearing the case in May, after China's State Intellectual Property Office declared Holley's patent valid.

The ruling comes as China prepares to issue third-generation mobile licenses as early as this month, a move expected to spur spending on equipment and services in the world's biggest mobile phone market, with 650 million users.

Beijing put off awarding 3G licenses while it worked on developing its own standard and restructured the telecoms industry.

As competition for that business heats up, Holley is among Chinese companies expecting to benefit from their local status.

The company, based in Hangzhou, said in statements on its Web site that it has received government support in terms of funding and policies.

'Samsung won't be the last to be prosecuted for the infringement of the dual-mode patent of Holleycomm,' Holley cited its president, Ge Chen, as saying in a statement on its website. -- AP