Huawei Sues PanOptis, Says Terms Not Met for 'Contingent Payment' in Patent Dispute

Huawei and PanOptis Patent Management are in dispute over whether conditions were met requiring Huawei to make a contingent payment under the terms of a January 2020 patent agreement, said a complaint Thursday (docket 1:24-cv-04708) in U.S. District Court for Southern New York in Manhattan.

The agreement set forth two monetary payments from the Chinese electronics company to PanOptis: the first, the “non-refundable payment,” and a second “contingent payment” due “only if certain conditions were met by a specified deadline,” the complaint said. Huawei made the non-refundable payment, but the parties don’t agree on whether conditions for the contingent payment were made by the deadline set forth in the agreement, it said.

Huawei engaged in “good-faith negotiations with PanOptis beginning in January, with the aim of resolving the dispute,” but after multiple discussions, the parties have been unable to reach a resolution “and are at an impasse,” said the complaint. PanOptis “has not provided Huawei with financial evidence sufficient to show that the conditions were satisfied,” it said.

During the discussions, PanOptis sent an invoice for the contingent payment to one of the plaintiff Huawei entities, alleged the complaint. The defendant subsequently said the invoiced contingent payment was due Feb. 24, and Huawei violated the agreement by not making the contingent payment on time. After months of trying to resolve the dispute, Huawei “remains without sufficient information from PanOptis” to verify whether the agreement’s conditions for the contingent payment had been satisfied, the complaint said.

When PanOptis sought payment from Huawei for the contingent payment, the plaintiff “engaged in good faith” with the Texas-based IP registry, said the complaint. Huawei’s commitment included attending meetings with PanOptis’ leadership on multiple occasions, “exchanging proposals for materials that could provide financial evidence, and reviewing the limited financial materials that PanOptis did provide,” the complaint said. Huawei requested financial evidence demonstrating that the income PanOptis identified satisfies the agreement’s requirements, but the information the defendant provided “indicates that the conditions have not been satisfied,” it said.

The parties conferred Tuesday but failed to resolve the dispute or develop a reasonable, mutually agreeable path forward, said the plaintiff. As a result, Huawei sent a notice letter to PanOptis confirming that it understood that the attempt to resolve the dispute failed and that “judicial assistance was necessary to resolve the dispute,” said the complaint. Huawei “is not obligated to pay” the contingent payment to PanOptis, it said.

The contractual dispute “is ripe for judicial adjudication because Huawei attempted to resolve this dispute with PanOptis in good faith,” the complaint alleged. The plaintiff satisfied all preconditions to a lawsuit specified in the agreement, it said. Huawei requests a declaratory judgment that it is not required to pay the contingent payment identified in the agreement, plus awards of attorneys’ fees, costs and further relief to be determined by the court.