US authorities to investigate Huawei for possible IP theft


On Thursday, the Wall Street Journal reported U.S. authorities opened a new investigation into Huawei for alleged intellectual property (IP) theft. Federal prosecutors for the Eastern District of New York served the Sino corporation with a subpoena seeking documents related to its business practices. Notably, the publication reports the Eastern District’s inquiry isn’t associated with charges the federal government filed against the conglomerate earlier this year.

The Wall Street Journal notes prosecutors aren’t looking into the Chinese firm for trade secrets from one company. Instead, authorities believe Huawei stole technology from a host of different companies for several years. Moreover, investigators are also looking into how the telecommunications conglomerate came to hire staff that previously worked for its competition.

Huawei v. the United States of America

Since the U.S. Department of Commerce put Huawei on its Entity List, the conversation surrounding the firm has been about its possible subversion by the Chinese government. Indeed, it’s noteworthy that the U.S. government has accused one of the world’s leading telecoms of spying on its customers. However, federal authorities have also accused the tech company of engaging in a host of unethical business practices.

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For instance, in January, federal prosecutors indicted Huawei on charges of stealing technology from T-Mobile. Authorities allege the Sino telecom attempted to take a product testing robot from the American wireless carrier. The Justice Department’s filings are atypically engrossing, telling of a years-long conspiracy that involved infiltration of secured facilities, illicit photos, and corporate burglary.

In that instance, Huawei told T-Mobile its spies acted independently. However, prosecutors claim the firm maintains a bonus program for workers that steal IP from other organizations. Moreover, the company’s allegedly unethical practices extend beyond the rank-and-file.

High-Level Corruption

In December, Canadian authorities arrested its CFO Meng Wanzhou at the request of the U.S. government. Federal prosecutors have charged Meng with a series of crimes, including selling American-made technology to Iran. As part of her extradition process, the Canadian court recently publicized documents noting Meng admitted to breaking U.S. trade sanctions under questioning.

Additionally, one of the firm’s executives has been accused of orchestrating the theft of the company’s IP.

In June, tech startup CNEX Labs sued Huawei for perpetrating a multiyear scheme to steal its solid-state computer storage tech. Moreover, the firm claims the telecom’s deputy chairman Eric Xu directed a staffer to conduct the IP theft.

After a three week trial, a Texas jury found Huawei guilty of misappropriating CNEX’s IP. The Chinese firm expressed disappointment at the verdict and mentioned considering an appeal.

Despite its long-standing practice of denying culpability, Huawei did admit to wrongdoing in one corporate espionage case. In 2003, Cisco accused the company of copying its router technology. Addressing the issue, the firm’s General Counsel Mark Chandler flew to Chinese company’s headquarters in Shenzhen.

During a meeting with CEO and founder Ren Zhengfei, Chandler pointed out Huawei’s engineers repurposed Cisco’s designs so blatantly; they copied over specific coding errors and typos. In reply, Zhengfei said, “Coincidence.” Cisco subsequently sued the controversial telecom, and the case was settled out of court. However, Huawei did admit to copying its rival’s proprietary technology.

To date, the U.S. government hasn’t proven that Huawei has used its technology to spy for the Chinese Communist Party. Indeed, federal officials have argued in court that the telecom’s status as a “perspective threat” justifies its blacklisting. But while the Sino firm may not be a threat to national security, the actions of its leadership indicate it is a threat to America’s businesses.