China's Huawei rejects Motorola's espionage claims

13:53, July 23, 2010      

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U.S. mobile phone maker Motorola is suing its Chinese rival Huawei Technologies for allegedly stealing trade secrets, an allegation Huawei rejected as "groundless and utterly without merit."

In an amended complaint filed last week in the U.S. District Court for the Northern District of Illinois, Motorola alleged that the Chinese telecom equipment giant stole confidential information about its cellular network equipment.

The complaint alleged that former Motorola employee Shaowei Pan secretly reported to Ren Zhengfei, Huawei's founder and chairman, while he was working at the Schaumburg, Ill.-based company.

Motorola claimed that Pan left the company to help set up Lemko Corp., also based in Schaumburg, IL, with the intention of stealing more trade secrets from Motorola.

In an e-mailed statement released on Thursday, Huawei said the lawsuit had no merit and denied any wrongdoings.

"The complaint is groundless and utterly without merit," said the statement.

"Huawei will vigorously defend itself against baseless allegations," it said.

"Moreover, as an active and significant player in global standards-setting bodies, Huawei has great respect for the right of intellectual property holders, and will with equal vigor protect its own hard-earned intellectual property rights," the company said.

The statement said that Huawei, which in the past has had an agreement with Motorola allowing that company to resell Huawei's wireless equipment, has only recently learned of the amended Motorola complaint.

It added that Huawei has no relationship with Lemko, other than a reseller agreement.

Motorola spokeswoman Tama McWhinney declined to comment on the issue citing the pending litigation, but wrote in a statement that "This litigation is nothing more than a legal dispute between Motorola, Lemko and Huawei."

"Motorola has a 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," said the statement.

Tech analysts agree that it is unlikely that the lawsuit will have a wider impact on U.S. tech firms' relationships with Chinese vendors.

Toan Tran, associate director of the technology team at Morningstar said in an interview with Xinhua: "The issue that U.S. firms may have with Chinese vendors or competitors has always been about intellectual property right."

But he said that U.S. firms have always sought to strike a balance between negative news, its manufacturing needs and desire to reach the growing Chinese consumer market.

Citing the example of the recent suicides at Foxconn Technology Group, the world's largest maker of electronics, and a supplier for Apple, Tran said despite the negative news, it's hard for Apple to find manufacturers that can handle its production needs.

"I don't think someone like Apple can really partner with someone else beyond Foxconn or Hon Hai because there's no one else that can provide the manufacturing structure that Apple needs to produce its product at the scale it does," Tran said.



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