Huawei in trade secrets loss, releases IP whitepaper
Huawei has misappropriated the trade secrets of American semiconductor company CNEX Labs, a Texas jury found yesterday, June 26, a day before the Chinese telecoms company revealed it has paid more than $6 billion in licensing fees over the past two decades.
The jury at the US District Court for the Eastern District of Texas declined to award any damages to CNEX, but also cleared the American lab of stealing trade secrets from Huawei.
The verdict has put the two-and-a-half year trade secrets and patent dispute to rest.
Back in 2017, Chinese telecoms company Huawei sued CNEX for misappropriation of trade secrets and for poaching employees, accusing a former employee who co-founded CNEX of stealing technology.
CNEX hit back with counterclaims, claiming that Huawei had recruited a Chinese professor to help steal trade secrets from the US company.
According to CNEX, a Chinese professor colluding with Huawei had asked for one of the laboratory’s circuit boards as part of a research project he was working on. CNEX said that, despite a non-disclosure agreement with the professor, details of the circuit board’s technical specifications were passed on to Huawei.
The counterclaims said: “Huawei took CNEX’s proprietary and trade secret information and shared it with the personnel developing Huawei’s SSD controllers in violation of representations made to CNEX and restrictions placed on the distribution of CNEX’s technical information.”
Yesterday, the jury found that Huawei had misappropriated trade secrets from CNEX but that the misappropriation didn’t cause Huawei to be unjustly enriched.
The jury also rejected Huawei’s claims of trade secret misappropriation, but did find that its former employee had failed to comply with Huawei’s patent application disclosure provision in his contract.
The agreement required the employee to provide Huawei with a complete copy of each patent application he had filed or was named as the inventor on, for one year following the termination of his employment.
A spokesperson for Huawei said it was disappointed with the jury verdict.
“We believe that all innovation deserves equal treatment and protection, including the innovations made by Chinese companies like Huawei,” the spokesperson said. “We still have faith in the US judicial system, the openness of its legal proceedings, and its commitment to enforcing the separation of powers. We will evaluate this verdict as well as our possible next steps.”
Earlier today, Huawei released a white paper on innovation and IP, while warning against the issue being politicised.
According to the report, innovation and IP protection lie at the heart of Huawei’s success for more than 30 years.
At the end of 2018, Huawei has been granted 87,805 patents, of which 11,152 are US patents. Since 2015, Huawei has received over $1.4 billion in licensing revenue.
Over the past two decades, Huawei has paid more than $6 billion in royalties to legally implement the IP of other companies, with nearly 80% of that paid to American companies, according to the report.
Song Liuping, Huawei’s chief legal officer, said: “As always, Huawei is ready and willing to share our technology with the world. That includes 5G. It includes US companies and US consumers. Together, we can drive our industry forward and advance technology for all mankind.”
In May, the US Department of Commerce added Huawei to a trade blacklist amid an ongoing IP trade row between the US and China.
This was preceded by the US Department of Justice filing 23 criminal charges against Huawei, including allegations that it operated a rewards system for employees to incentivise the theft of trade secrets.
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