The U.S. Indicts Huawei Citing Decades-Long Efforts to Steal IP and Trade SecretsFebruary 20, 2020 by Luke James
The Department of Justice has indicted Huawei on revised grounds, accusing the company of stealing technology under RICO statutes.
This indictment is the Trump administration’s latest move in its fight against the Chinese tech giant, which it views as a threat to national security.
The U.S. has accused Huawei of stealing trade secrets and lying to U.S. federal investigators in a brand-new indictment. This is likely to worsen US-UK tensions as this news comes just a few weeks after the British government decided to allow the Chinese company to supply its 5G equipment in the UK, going against the U.S. administration's wishes.
New allegations in the superseding indictment state that Huawei has successfully engaged in a decades-long campaign to steal intellectual property (IP) to gain an unfair advantage over its competitors. It also states that Huawei engaged in covert efforts to ship its goods and services to Iran and North Korea, a move that would be in direct violation of US, European, and UN sanctions.
The Department of Justice (DoJ) stated that internal documents from Huawei showed that the company referred to the sanctioned countries using codenames, with prosecutors saying that this reflects the “inherent sensitivity” of Huawei’s business.
The U.S. center around the claim that Huawei illegally procured the IP of U.S. organizations through confidential agreements. (pictured: Huawei company logo on display at Mobile World 2019). Image used courtesy of Huawei
Stealing Trade Secrets
In its own press release, the DoJ accuses Huawei of almost two decades’ worth of efforts to steal the IP of U.S. organizations, including “source code and user manuals for internet routers, antenna technology and robot testing technology,” for the benefit of its own business. It is alleged that Huawei did this by entering into confidential agreements with American organizations with the sole intention of stealing IP and trade secrets.
“Huawei’s efforts to steal trade secrets and other sophisticated U.S. technology were successful,” the DoJ said. “Huawei was able to drastically cut its research and development costs and associated delays, giving the company a significant and unfair competitive advantage.”
An aerial view of Huawei's Hangzhou research center. Image used courtesy of Huawei
Although the indictment and press release do not provide any specific details about exactly which trade secrets have been stolen or which proprietary technologies have been exploited, it does state that Huawei’s U.S. subsidiary, Futurewei, stole operating system code from Cisco and used this to create Huawei-branded routers in the United States. It is believed by some that this could be used to further the development of Huawei’s own “Android replacement” operating system, HarmonyOS which was initially released in August 2019.
Huawei is accused of engaging in these acts to reduce the time and expense of developing its own software and technology. By stealing IP, trade secrets, and other assets, the company could, it is said, cut down or eliminate lengthy and costly research and development time, allowing the company to bring its products to market more quickly and undercut competitors.
Huawei Denies All Charges
In a statement, Huawei responded by claiming that the indictment was an attempt to “irrevocably damage Huawei’s reputation and its business for reasons related to competition rather than law enforcement”.
A spokesperson added that: “These new charges are without merit and are based largely on recycled civil disputes from last 20 years that have been previously settled, litigated and in some cases, rejected by federal judges and juries. The government will not prevail on its charges, which we will prove to be both unfounded and unfair.”
Bad News for Meng Wanzhou
This indictment comes only one year after the DoJ charged Huawei and its chief financial officer, Meng Wanzhou, with fraud and for circumventing sanctions. Wanzhou was arrested in Vancouver airport in December 2018 and currently remains on bail in Canada where she is fighting extradition to the United States. Unfortunately for Wanzhou, this indictment adds 16 counts of conspiracy to the charges of racketeering already stacked against her.
Despite pleas of innocence from Huawei, the indictment paints a picture of a company that has misled, on multiple occasions, investigative attempts into its activities. It also alleges that Huawei has misled U.S. authorities through obstruction, for example by instructing employees to hide their employment with the company when engaging with law enforcement officials.
The DoJ’s investigation continues.