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Motorola Sues Huawei over Trade Secrets

Thu, 07/22/2010 - 8:16am
Monica Alleven

This story has been updated with additional comment.

Motorola has filed a lawsuit accusing China's Huawei Technologies of alleged theft of trade secrets in cellular networking gear.

The complaint was filed in U.S. district court in Northern Illinois, claiming Huawei worked with former employees to get detailed confidential information. The employees named in the suit no longer work at Motorola, but they include one executive, Shaowei Pan, who is now listed as chief technology officer at Lemko, a defendant in the suit based in Motorola's hometown of Schaumburg, Ill.

“Huawei, which has an agreement with Motorola allowing that company to resell Huawei’s wireless equipment, has only recently learned of the amended Motorola complaint," Huawei said in a statement. "Based on our review of the complaint so far, the complaint is groundless and utterly without merit."

Huawei says it has no relationship with Lemko, other than a reseller agreement. "Huawei will vigorously defend itself against baseless allegations," the company said. "Moreover, as an active and significant player in global standards-setting bodies, Huawei has great respect for the rights of intellectual property holders, and will with equal vigor protect its own hard-earned intellectual property rights.”

Lemko released a statement saying it believes Motorola initiated the litigation against Lemko and its employees to financially weaken the company in an attempt to either stall the development of its software or to abscond with them outright.

“It is unfortunate that Motorola continues to define its success by the number of frivolous lawsuits it commences. This latest allegation is consistent with that. It appears the company is better at manufacturing lawsuits than products. Perhaps they should redirect their shrinking levels of talent to fill the pipelines with better goods than clogging up the courts with silly, misdirected litigation," Lemko said in its statement.

The statement went on to say that Lemko and the individuals named have filed several counterclaims against Motorola and the court has dismissed at an early stage some of the claims against Lemko and its professionals. "While Lemko takes all litigation seriously, the Motorola litigation naming the corporation and its employees is a venomous nuisance. This is counterproductive in light of their prior relationship in which Lemko had various collaboration meetings with Motorola professionals. In fact, more than 100 Motorola staff members have visited Lemko’s office and been educated about the company’s innovative technology under multiple NDAs," the company said.

The two companies entered into numerous mutual non-disclosure agreements to protect any and all confidential information that would or could be disclosed as part of their relationship, Lemko added.

Motorola said its policy is not to comment on pending litigation but it will vigorously protect its intellectual property. "This litigation is nothing more than a legal dispute between Motorola, Lemko and Huawei," Motorola said in its statement, reinforcing its long-term commitment to China. "We have developed deep relationships with local partners, including government, customers, suppliers, and distributors, and will continue to grow our presence here. As a technology-driven company, Motorola has developed first-rate R&D forces in China to help stimulate innovation, foster talent and create new technologies. We look forward to continuing to develop relationships in China."

Revelations of the lawsuit come after Motorola announced an agreement earlier this week to sell its Networks business to Nokia Siemens Networks. The acquisition will make Nokia Siemens the world's No. 2 network equipment maker, displacing Huawei in that spot.

At the time, Yankee Group Principal Analyst Ken Rehbehn called the move a "blow" to Huawei, which has struggled for years to expand its footprint in North America. "While Huawei may have made expansion in the U.S. a strategic priority, this loss significantly limits its ultimate reach in the region's mobile equipment market," he said.

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