Huawei sues Motorola over sale to Nokia

Chinese telecom equipment maker Huawei is suing Motorola and asking a court to stop the sale of part of Motorola's wireless equipment business to Nokia Siemens.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
3 min read

Chinese telecom equipment maker Huawei is suing Motorola, claiming the American company will illegally transfer its trade secrets in the proposed sale of its wireless business unit to Nokia Siemens.

Huawei filed the lawsuit in the U.S. District Court in Illinois. The company seeks to stop Motorola employees and information associated with Motorola's UMTS and GSM equipment businesses from being transferred to Nokia Siemens Networks. Motorola announced in July 2010 that it plans to sell its entire wireless infrastructure business, which includes products it sells for 3G wireless networks, in a deal that is worth about $1.2 billion.

Huawei argues in its complaint that the transfer of Motorola assets to Nokia Siemens would cause "the massive disclosure of Huawei's confidential information to NSN, with irreparable harm to Huawei." Specifically, the company argues that a large number of Motorola employees, who will be transferred as part of the deal to Nokia Siemens, have direct knowledge of Huawei's confidential information.

Neither Motorola nor Nokia Siemens have responded to the lawsuit yet.

Motorola has been reselling Huawei radio access gear for GSM and UMTS wireless networks since 2000. As part of this relationship, Motorola employees have been trained to sell and troubleshoot Huawei's wireless products. Nokia Siemens also makes and sells GSM and UMTS gear that competes directly with Huawei's equipment.

"The entire intent of filing the injunction is to prevent our intellectual property from being handed over to one of our competitors on a silver platter," said Bill Plummer, a vice president of external affairs for Huawei.

Plummer said that Huawei has tried to negotiate with Motorola since the deal was announced, but so far Motorola has not provided assurances to Huawei that its intellectual property will be protected once the deal is complete.

This is the first time that Chinese-based Huawei has initiated legal proceedings against a U.S. company. However, Huawei has been the target of lawsuits by others. Several years ago, Cisco Systems sued the company for infringing on its patents for IP network equipment. The suit was eventually settled. In June, Motorola sued Huawei for supposedly stealing its trade secrets as part of a corporate espionage case. The legal action follows a suit from 2008 in which Motorola sued five former employees for sharing information with IP networking firm Lemko, headquartered in Schaumberg, Ill., where Motorola is also located. Lemko has a reseller agreement with Huawei.

Congressional leaders have also tried to block the sale of Huawei's telecommunications products to U.S. wireless operators over security concerns.

But Huawei representatives say the company respects intellectual property and is simply defending its own trade secrets with this lawsuit.

"As a global technology leader with a rich IP and patent portfolio, Huawei respects the rights of intellectual property holders and is equally committed to the protection of its own innovations and intellectual property," the company said in an e-mail statement. Nearly half of Huawei's 100,000 plus employees are engaged in research and development and Huawei allocates an average of 10 percent of all revenues to research and development annually. By the end of 2010, Huawei had applied for 49,040 essential patents on a global basis."