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Huawei executive accused of helping steal trade secrets

Huawei executive accused of helping steal trade secrets

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Illustration by Alex Castro / The Verge

A Huawei executive was involved in a plot to steal trade secrets, claims California-based electronics startup CNEX Labs. Chinese telecommunications company Huawei and CNEX — which was co-founded by a former Huawei employee — have filed dueling lawsuits over trade secret theft. Now, The Wall Street Journal reports that high-level Huawei figure Eric Xu has been accused of helping oversee an alleged conspiracy.

The Journal quotes a newly released hearing transcript that offers some details in a largely locked-down trial. According to its write-up, CNEX claims that Xu — one of Huawei’s rotating chairmen — “directed a Huawei engineer to analyze Cnex’s technical information.” The engineer then allegedly posed as a potential CNEX customer to obtain details about its operations. CNEX also says that Xu was briefed on a plot to surreptitiously gather information from Xiamen University, which had obtained a computer memory board from CNEX.

According to the Journal, Huawei lawyers admitted that Xu had been “in the chain of command that had requested” information about CNEX, but they denied that any trade secrets had been stolen. “The relevant reports regarding the CNEX case are misleading and contain unsubstantiated allegations,” said Huawei in a statement to The Verge. “The presiding judge has twice denied CNEX’s attempts to drag Mr. Xu into the litigation. In addition, CNEX’s legal team have such little faith in the Xiamen University conspiracy theory that they did not seek any documents or testimony from the university, its professors, or personnel.” CNEX didn’t immediately respond to a request for comment.

This is probably not Huawei’s biggest problem right now

Huawei originally filed a lawsuit against CNEX co-founder Yiren “Ronnie” Huang in 2017, claiming Huang — who left Huawei in 2013 — had poached employees and used its patents to build CNEX’s solid-state drive technology. CNEX counter-sued, claiming that Huawei had misappropriated its tech and was trying to gather even more information through the lawsuit.

Right now, the case likely isn’t Huawei’s most pressing problem. President Donald Trump recently signed an executive order that let him ban American companies from dealing with Huawei — partly because of fears that the company’s telecom infrastructure contained security exploits that the Chinese government could use for espionage, but possibly also as retaliation against China amid an ongoing trade war. Either way, Google revoked Huawei’s Android license, ARM cut ties with the company, and Microsoft has distanced itself as well. Meanwhile, another Huawei executive was arrested last year on suspicion of violating sanctions against Iran.

A trial over CNEX’s claims is scheduled to start on June 3rd in Texas.

Update 9:15AM ET: Added statement from Huawei.