Creative awarded $36m in damages in Huawei lawsuit

High Court holds China firm liable for misrepresentation and breach of contract, and dismisses counterclaim

Singapore soundcard maker Creative Technology has scored yet another legal victory against a technology giant - this time against China's Huawei, one of the world's largest telecom equipment makers.

Creative yesterday said the company and its subsidiary, QMax Communications, were awarded $36 million in damages over a failed nationwide wireless broadband project in 2012.

Its lawsuit alleged misrepresentation and breach of contract by Huawei after it pumped around $30 million into the network and then was forced to abandon it.

It sought to recover "wasted" payments made - US$9.4 million (S$13 million) to Huawei and $19.5 million to various third parties for installation, leases and other operating costs, blaming Huawei for miscalculating and misrepresenting the cost of the network.

Huawei in turn countersued for outstanding payments for services and equipment, and damages for alleged wrongful termination of the contract.

In 2009, Creative explored the possibility of building a wireless broadband network using WiMax technology after acquiring broadband infrastructure firm QMax. WiMax is a fourth-generation (4G) technology for high-speed mobile communications.

In response to Creative's tender, Huawei submitted a proposal to design, build and operate a WiMax network to cover Singapore.

  • 225

  • The number of base stations Huawei said it could provide with the given budget. The Chinese tech giant later said the figure was a "mere expression of opinion", and that while it could meet its budget, it would translate into a lower-quality network.

After several rounds of negotiations, Creative told Huawei that it had a budget of US$20 million. Huawei said it could meet the budget by providing nationwide coverage with 225 base stations.

But the Chinese tech giant later said the figure of 225 was a "mere expression of opinion" and that its representative had warned Creative that while Huawei could meet its budget, it would translate into a lower-quality network.

The High Court, in a judgment yesterday, found Huawei "liable for misrepresentation and was grossly negligent". Huawei was also held, in the alternative, liable for breach of contract.

Huawei was ordered to pay US$9.3 million and $15.6 million with interest, totalling $36 million, and its counterclaim was dismissed. In addition, costs of the proceedings were awarded to Creative and QMax.

Creative noted that if Huawei does not appeal, then the judgment award will be recognised in the firm's financial statements for the quarter ending Sept 30.

Creative requested that a trading halt be lifted after the release of the announcement. The stock last traded at $1.05.

Previously, Creative had scored at least two legal victories against iPhone giant Apple. In 2005, it won a landmark US$100 million settlement with Apple over patent infringement claims, and in 2015, its unit ZiiLabs Inc won another case alleging that several ranges of iPhone, iPad and iMac products infringed 10 of its patents. As part of the settlement, Apple obtained a licence for ZiiLabs' patents.

A version of this article appeared in the print edition of The Straits Times on August 17, 2017, with the headline 'Creative awarded $36m in damages in Huawei lawsuit'. Print Edition | Subscribe