Court Finds for Huawei vs Moto
Huawei Technologies Co. Ltd. has been awarded a preliminary injunction against Motorola Solutions Inc. (NYSE: MSI) and Nokia Networks by the U.S. District Court for the Northern District of Illinois Eastern Division in its battle to prevent confidential information transferring between Motorola and NSN in the pair's planned acquisition deal. (See NSN to Buy Moto's Wireless Biz for $1.2B and Might NSN Choke on Its Moto Morsel?.)
Huawei filed a lawsuit against Motorola in January in an effort to prevent some of its intellectual property (IP) being transferred to NSN. (See Huawei Sues to Block Moto Sale to NSN and Huawei Wins Restraining Order Against Moto.)
Huawei developed GSM and UMTS mobile network technology for Motorola during the past 10 years, resulting in (according to the court ruling) the purchase by Motorola of US$878 million of Huawei products during the past decade. That process involved the Chinese vendor sharing confidential information so that Motorola could support its customers, and now Huawei doesn't want that IP to be in any way involved in NSN's acquisition of Motorola's wireless infrastructure assets.
Now the court has decided that:
Huawei has demonstrated that it has a reasonable likelihood of success on the merits of
its threatened misappropriation of trade secrets claim against Motorola and NSN relating to
NSN’s plan to acquire Motorola’s networks business and hire former Motorola employees with
knowledge of Huawei’s trade secrets. Huawei has established that it will suffer irreparable
competitive harm if its trade secrets are disclosed to NSN or are inevitably relied upon by former
Motorola employees who transfer to NSN. The balance of hardships lies in its favor, and the
public interest will be furthered by affording meaningful protection to Huawei’s confidential
Now the onus is on NSN and Motorola to prove that the planned acquisition will not include the transfer of any Huawei intellectual property in any form.
Huawei's Global Head of Corporate Communications, Ross Gan, noted in a statement e-mailed to Light Reading: "Huawei is pleased that the court continues to recognize the merits of our claim that Motorola must abide by its contractual obligations to protect Huawei's trade secret and intellectual property. We hope that Motorola will now turn its focus to the issue of the substantive arbitration that we believe can both ensure that our intellectual property rights are protected and that their sale to our direct competitor can move forward. This legal action was carried out only after Motorola was unable to assure us that they would meet their contractual obligations to protect our intellectual property, we have no interest in stopping the transaction between Motorola and our direct competitor. We will, however, do whatever is required to protect the product of our company's many years of innovation."
NSN, meanwhile, has once again stressed that it isn't interested in Huawei's IP. (See NSN 'Has No Interest' in Huawei IPR.)
In an e-mail statement, the company noted that it "acknowledges the judgment of the Court today and is studying the ruling in detail to establish our next step. As previously stated, we have no interest in getting unlawful access to Huawei’s trade secrets, Our key motivation is to expand our presence in key regions, such as the US and Japan, and enhance our relationships with important customers to whom we can bring additional value. Nokia Siemens Networks will also continue to work with the Chinese regulatory authorities to get the final anti-trust approval required to enable it to complete its acquisition of Motorola’s networks business. It remains our ambition to bring Motorola’s talented team on board as soon as possible."
NSN says it is still "working towards closing in Q1."
— Ray Le Maistre, International Managing Editor, Light Reading