Huawei Indictment and Motorola Win

by Eve Chowdhury '20

On February 12, 2020, a superseding indictment was returned yesterday in the U.S. Eastern District Court of New York, charging defendants Huawei Technologies (Huawei), the world’s largest telecommunications equipment manufacturer, Futurewei Technologies and Skycom Tech, two of Huawei's U.S. subsidiaries, and Wanzhou Meng (Meng), a board director, with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO).

The 16-count superseding indictment also adds a charge of conspiracy to steal trade secrets stemming from Huawei’s alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from six U.S. technology companies, in an effort to grow and operate Huawei’s business. The misappropriated intellectual property included trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology.

The alleged misappropriation included, among others: (1) the defendants entering into confidentiality agreements with the owners of the intellectual property and then violating the terms of the agreements by misappropriating the intellectual property for the defendants’ own commercial use, (2) recruiting employees of other companies and directing them to misappropriate their former employers’ intellectual property, and (3) using proxies such as professors of research institutions to obtain and provide the technology to the defendants. Further, Huawei allegedly launched a company-wide bonus program that rewarded employees with monetary gain when the employees obtained confidential information from Huawai's competitors.

The Department of Justice deems Huawei’s efforts to steal trade secrets and other sophisticated U.S. technology to be successful. Through the above methods, the defendants obtained private intellectual property relating to internet router source code, cellular antenna technology, and robotics, and were able to drastically cut its research and development costs and associated delays, giving the company a significant and unfair competitive advantage.

This investigation is ongoing. The charges in the superseding indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. This above information was primarily based upon the Press Release the Department of Justice published on February 13, 2020.

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Of note, this is not the first time in recent years of a U.S.-based entity charging a China-based telecommunications entity of misusing proprietary information.

U.S.-giant Motorola Solutions, a communications and telecommunications equipment company, has been suing Chinese giant Hytera Communications, a manufacturer of radio transceivers and radio systems, in multiple suits across U.S. federal courts and worldwide for multiple counts of intellectual property theft since 2017.

On March 14, 2017, Motorola sued Hytera in Chicago federal court in two separate suits, one for patent infringement (1:17-cv-01972) and one for trade secret misappropriation (1:17-cv-01973).

In the trade secret suit, Motorola accused Hytera of misappropriating Motorola's two-way radio technology systems trade secrets under the DTSA and Illinois state law. Hytera responded that, among other defenses, Motorola does not have a trade secret or such was abandoned. After being awarded a $764 million jury verdict against Hytera, Motorola is currently in the process of obtaining a global temporary restraining order against Hytera. Going forward, this means that the Defend Trade Secrets Act may apply to acts of trade secret misappropriation that occur outside the U.S.