Huawei wins preliminary injunction in Motorola lawsuit

Huawei wants to prevent Motorola from transferring Huawei trade secrets to Nokia Siemens Networks
  • (IDG News Service)
  • — 23 February, 2011 20:56

Chinese network equipment maker Huawei has won a preliminary injunction from a U.S. court, preventing Motorola Solutions from carrying out the transfer of trade secrets to Nokia Siemens Networks.

The court order, made on Tuesday, threatens to complicate a US$1.2 billion deal Nokia Siemens Networks made to acquire Motorola's telecommunication equipment network business.

Last month, Huawei filed a lawsuit accusing Motorola of planning to give away the Chinese company's intellectual property as part of its deal with Nokia Siemens Networks.

In the past, Motorola had relied on Huawei to develop and design its cellular communication networks, purchasing equipment worth $878 million from the Chinese company. Through those past agreements, Huawei had provided confidential information to Motorola, which the company was obligated to protect.

The court found that Huawei would "suffer irreparable competitive harm" if the trade secrets were given to Nokia Siemens Networks. The preliminary injunction lasts pending a decision on the case or further court order.

Huawei has no interest in stopping the transaction between Motorola and Nokia Siemens, it said. "We will, however, do whatever is required to protect the product of our company's many years of innovation," it said.

Motorola and Nokia Siemens Networks could not be reached for immediate comment.

The court order represents a small win for Huawei following its recent struggles in the U.S. to complete its own acquisition of intellectual property. Last week, Huawei said it would follow the recommendation of a U.S. government panel to divest from a business deal that had drawn national security concerns.

In May, Huawei had paid $2 million to buy intellectual property from 3Leaf Systems, a U.S. startup that specializes in grouping servers to build more powerful mainframe computers. The Committee on Foreign Investment in the United States (CFIUS), however, reviewed the deal and asked Huawei to reverse it.

Huawei's recent troubles stem from some U.S. government officials' belief that the company has links to the Chinese military. Huawei denies any such ties, insisting it wants to be transparent.

The reversal of the 3Leaf Systems acquisition even drew attention from the Chinese government. China's Ministry of Commerce said in a statement earlier this week that U.S. regulatory authorities have been "obstructing and interfering in the investment activities of the Chinese enterprises in the U.S., on all kinds of excuses including protecting national security."

"To some extent, the obstruction and interference is affecting China-U.S. trade and economic cooperation," the statement said. "We hope the U.S. side can give up prejudice, avoid adopting protectionist measures, and properly treat the investment from China and other countries with a fair, just and open attitude."

The collapse of Huawei's deal for 3Leaf Systems has more to do with U.S. politicians wanting to attract attention, said Matt Walker, an analyst with research firm Ovum. "Huawei was simply in the wrong place at the wrong time," he said, noting that jealousy and resentment over China's economic rise may have factored in the U.S. government pressuring Huawei to reverse the acquisition.

Huawei's lawsuit against Motorola could be seen as a way for the company to fight back against what it views as unfair treatment, Walker added. "That is certainly one reasonable way to view Huawei's very late complaints against (Nokia Siemens Network's) purchase of Motorola wireless assets," he said.

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Michael Kan

IDG News Service
Topics: Motorola, business issues, Huawei Technologies, telecommunication, Nokia Siemens Networks, Mergers / acquisitions, intellectual property, legal, Civil lawsuits
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