June 6, 2014 3:08 am JST

Qualcomm hit with trademark suit over name in China

NORIYUKI DOI, Nikkei staff writer

SHANGHAI -- U.S. chip producer Qualcomm is facing a lawsuit in China that could force it to change its name used in the country and cough up millions of dollars.

     A Shanghai-based semiconductor manufacturer filed suit in April, asking for an injunction to stop Qualcomm from using Chinese characters that read "Gaotong" in its name and to fork over 100 million yuan ($15.9 million) in damages. A high court here accepted the case Thursday.

     The local company, whose name translates to "Shanghai Gaotong Semiconductor," claims that Qualcomm's use of the same "Gaotong" in its own name is a trademark violation.

     The plaintiff had registered the "Gaotong" trademark in China back in 1992. Its lawyer says Qualcomm applied to register "Gaotong" as its own trademark in 2010 but never received approval. The Shanghai company makes chips for mobile handsets and claims that the U.S. giant's use of the name has rendered normal operations impossible.

     "We negotiated with Qualcomm multiple times but did not reach agreement," the company's chairwoman says.

     This is not Qualcomm's first time facing legal headwinds in China. The National Development and Reform Commission, a planning body, said this February that it was investigating the company on suspicion of antitrust violations.

     Qualcomm controls roughly half of the global market for microprocessor units used in smartphones. China lacks its own formidable companies in the area, leading some to believe that the commission is acting to protect domestic industry.

     Trademark law revisions that took effect May 1 stiffened penalties for infringement.