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 information.

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

Abundant_bits 12/5/2012 | 5:12:22 PM
re: Court Finds for Huawei vs Moto

Wow, a Chinese company upset and suing an American company over the possibility of stealing trade secrets. Pity the courts can't just let Moto walk on Karma alone.....

DCITDave 12/5/2012 | 5:12:16 PM
re: Court Finds for Huawei vs Moto

That PS was a doozy.

So what's the current thinking for, say, a Web developer or programmer. Is it more cost effective to hire in India or China? Is Korea creeping into the discussion at all?

DCITDave 12/5/2012 | 5:12:16 PM
re: Court Finds for Huawei vs Moto

Kind of shoots a hole in the theory that all Huawei does is throw people at any problem. Maybe Moto stole a sheet that said, "Hire tons of engineers for $3,000 a year. Good luck."

paolo.franzoi 12/5/2012 | 5:12:16 PM
re: Court Finds for Huawei vs Moto


But both things are true.  There has been plenty of what we would consider IP theft in China.  I do not have direct proof that Huawei has done this, but there was a lot of chatter around Cisco Router code.  But there are also a lot of relatively low-cost, smart Engineers who work at Huawei.  The company is able to throw lots of skilled Engineers at any problem.  They develop valuable IP of their own.


PS - Anybody out there got the sensitivity analysis around the cost delta for Indian Engineers and Chinese Engineers and compare that to what folks would think the delta would be if the Yuan floated?


paolo.franzoi 12/5/2012 | 5:12:14 PM
re: Court Finds for Huawei vs Moto


I would say the general consensus is that India is easier to get software/web types in and product, manufacturing, hardware folks are better in China.  Not saying there aren't good Chinese SW folks and good Indian HW guys.  There is just a momentum the way that people are headed.


PS - Phil, have I reminded you that of course the Yuan is floated through video games?  For those that have not heard my explanation of this...you can buy/sell in game money and items for various currencies (Real World Currencies).  The ingame money exchanges provide a medium to set a currency exchange between the floating currency (dollars) and fixed currency (yuan) that actually floats.  Nobody notices this because its just a "game" and the money is "fake" or just "bits".  Guess Paypal is "real".

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