The lawsuit is the first to be heard under the U.S. Defend Trade Secrets Act of 2016; as per Matthew Goss, general counsel for CNEX, Huawei is “weaponizing our courts against U.S. companies.”
On Monday, in a lawsuit that is likely to shed more light on the corporate behavior of China’s Huawei Technologies, a former employee of the Chinese telecommunications equipment supplier will play a key role in the trial wherein the company faces alleged charges of corporate espionage, racketeering and a secret database of rivals’ technology.
The U.S. lawsuit is likely to place a spotlight on the Chinese company and build pressure on U.S. allies to not purchase its networking gear due to security concerns which could compromise national security.
Jury selection will begin today in a federal court in Sherman, Texas, and the trial is expected to last around three weeks. Presiding over this lawsuit is Judge Amos Mazzant, who is also separately hearing Huawei’s bid to overturn the U.S. government’s ban on its sales to government agencies and other U.S. contractors.
According to court documents, Huawei’s lawsuit against former employee Ronnie Huang and his startup, CNEX Labs Inc, claims an “an illegal pattern of racketeering” by the ex-manager to steal its technology and poach its staff.
CNEX develops chips that speed up data storage on cloud computing networks.
Huang denies wrongdoing and has filed a countersuit, alleging Huawei is using U.S. courts to acquire his and others’ technology and quash rivals.
According to Huawei’s spokesperson, the company is seeking “many tens of millions of dollars” in damages and rights to nearly thirty trade secrets and CNEX patents.
Among other claims Huawei has stated another former Huawei employee has downloaded some of its secrets before he joined CNEX.
“Huawei proved a springboard for (Huang) to succeed where he otherwise could not have,” said Huawei’s spokesman. The case had nothing to do with tensions over the U.S. blacklist, he said. “This is not a U.S. versus China case”.
Huang started CNEX in 2013 and has raised more than $100 million from backers including arms of Dell Technologies and Microsoft.
According to Huang’s countersuit, a Huawei official had posed as a potential buyer and the company used its ties to a Chinese university to gain access to CNEX designs. CNEX has also alleged that Huawei rewarded its staff for stealing rivals’ trade secrets; further it also stores the pilfered technology in a secret database for its own use.
“(Huawei) is a vast competitive-intelligence gathering operation, gathering the intellectual property and trade secrets of the world’s top technology companies,” said Matthew Goss, CNEX general counsel, in an interview.
Goss said Huawei’s lawsuit, which includes one of the first claims to be heard under the U.S. Defend Trade Secrets Act of 2016, was “weaponizing our courts against U.S. companies.”
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