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Law & the Courts

Feds Open Criminal Case against Huawei over Alleged Trade-Secret Theft

A man walks past a Huawei shop in Beijing, China, December 19, 2018. (Thomas Peter/REUTERS)

Federal prosecutors are pursuing a criminal case against Chinese telecommunications giant Huawei over the alleged theft of American tech companies’ intellectual property, the Wall Street Journal reported Wednesday.

The investigation, which is expected to result in indictments in the near future, was sparked by a number of civil lawsuits brought against Huawei, including one focused on the appropriation of T Mobile’s “Tappy,” a device used to test smartphones. A jury in Seattle found Huawei civilly liable in May 2017 for stealing the proprietary technology that T Mobile relied on to develop the “Tappy.”

“Huawei has stolen that technology. It used that stolen technology to develop and improve its own testing robot, which it uses for its own benefit,” reads the complaint filed by T Mobile when the suit began in September 2014. “Huawei abused its relationship as a phone handset supplier for T-Mobile to obtain access to T-Mobile’s robot and, in violation of several confidentiality and nondisclosure agreements, copied the robot’s specifications and stole parts, software, and other trade secrets.”

News of the criminal investigation came just moments after a bipartisan group of senators introduced a series of bills that would ban the sale of U.S. microchips and other industrial components to Huawei.

“Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People’s Liberation Army,” Senator Tom Cotton (R., Ark.), one of the bill’s sponsors, wrote in a statement. “If Chinese telecom companies like Huawei violate our sanctions or export control laws, they should receive nothing less than the death penalty — which this denial order would provide.”

The legislation would also prohibit the sale of U.S. parts to Chinese telecom giant ZTE, reinstating a ban Congress lifted in April after the company agreed to pay a $1 billion fine for violating the U.S. embargo on trade with Iran.

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