Huawei Technologies Co. Ltd., the Chinese networking manufacturer involved in a bitter patent and copyright lawsuit with Cisco Systems Inc. (Nasdaq: CSCO), is fighting back against Cisco's legal attack and has outlined its defense in recent court papers.

The gist of Huawei's defense: While the company admits some of its routing products once held a small amount of Cisco IOS code, it says it no longer sells those routing products. It also denies there was any conspiracy to copy Cisco products.

Huawei last week filed a reply to Cisco’s motion for a preliminary injunction in the U.S. District Court in Marshall, Texas. Cisco had filed its motion on March 31, 2003, asking the court to force Huawei not to sell any of its products in the United States (see Huawei Admits Copying). Cisco alleged that Huawei stole its IOS operating system code and used it its Quidway routers (see Cisco/Huawei Brawl Begins).

“Cisco’s motion seeks to prevent Huawei from selling its products in the U.S. market and is no more than an attempt to stifle competition,” says the Huawei filing, dated April 10th.

The case could take years to resolve, but the preliminary injunction is a key battle. If the court rules in favor of Cisco, it could have a devastating effect on the newly formed joint venture between Huawei and 3Com Corp. (Nasdaq: COMS) (see 3Com Taps Huawei in Enterprise Battle). The two companies are expected to co-develop and co-market switching and routing products for the enterprise market throughout the world. But if Cisco is successful in getting an injunction, it’s possible that the joint venture will not be able to sell any of its products in the U.S.

But Huawei isn’t going down without a fight, as its latest filing suggests.

“The only facts Cisco had in its reply to the court concern products that Huawei proactively and voluntarily withdrew from the U.S. market and that will never be distributed again,” says Robert Haslam, partner at Heller Ehrman White & McAuliffe LLP, Huawei’s attorney. “These routers have been redesigned. Huawei’s good faith steps to take the relevant products off the market before any lawsuit was filed make Cisco’s actions unwarranted, and potentially unfairly damaging to Huawei, its customers, and the competitive landscape.”

FutureWei, Huawei’s U.S. subsidiary based in Plano, Texas, pulled its Quidway routers from the market in January 2003 (see Cisco Wins Round 1 Against Huawei). Since that time, Huawei says it has also stopped selling other routers using the same software code throughout the world.

Huawei says its new products, including the ones involved in the joint venture with 3Com, no longer have any Cisco source code in them. Bruce Claflin, 3Com’s CEO, has also attested to this fact in court papers.

Huawei cites a decision by the Fifth Circuit Court of Appeals, which implies that in order for the court to impose an injunction on all new Huawei products sold in the U.S., Cisco must prove that there is a good chance that Huawei will start selling the offending products again or sell new products that continue to infringe on Cisco’s patents and copyright. Huawei argues that a mere possibility of such action doesn’t warrant an injunction.

Cisco says it’s sticking to its guns. Although the company wouldn’t discuss the case at length, it submitted this statement regarding the latest filing:

“Nothing in Huawei's latest filing changes the fact that a broad injunction is necessary and appropriate to prevent Huawei's continued copying of Cisco's intellectual property,” says Kim Gibbons, a Cisco spokeswoman.

Huawei denies Cisco’s claims that the code under dispute, VRP, is still available on its English Websites and says that any information that remains is password protected and available only to Huawei engineers, who are currently working on fixing the code.

Huawei also claims there is no proof that the 1.5 million lines of code that resemble pieces of IOS came from Cisco. It says that IOS code has been, and is still, circulating through the Internet. It refers to an FTP server maintained by a Russian service provider where IOS code can be accessed.

As for targeting Cisco employees, Huawei says that out of its 33 Futurewei employees, only two are from Cisco, and neither of them were from Cisco’s routing division. What’s more, it asserts that all of its router development is done in China.

Huawei also refutes Cisco’s claim that it stole Cisco’s organizationally unique identifiers (OUI) used for data link switching (DLSw). In its March 31st filing, Cisco expanded its infringement claim, saying that Huawei had stolen Cisco identifiers in an attempt to pass off its routers as Cisco routers.

Huawei argues that the DLSw source code and the list of every manufacturer’s identification number is publicly available through the Internet Engineering Task Force (IETF) to ensure interoperability among vendors.

One thing is blaringly evident: The battle between these two companies is far from over, as new details will likely continue to surface when more court papers are filed. A decision regarding the preliminary injunction is still pending.

— Marguerite Reardon, Senior Editor, Light Reading