Huawei Loses Case Against Former Staffer’s Startup CNEX

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Chinese giant loses US court case against CNEX Labs after accusing it of stealing trade secrets

Huawei Technologies has lost a court case in the United States, after it accused CNEX Labs of stealing trade secrets and poaching its staff.

Huawei had sued CNEX in the US District Court in Sherman, Texas, in 2017, alleging that the US start-up and its co-founder Ronnie Huang, a former Huawei employee, had supposedly poached Huawei employees and stole trade secrets and intellectual property in order to launch the firm.

It had sought at least $85.7m in damages and rights to the San Jose, California, company’s memory-control technology.

Trade secrets

California-based CNEX Labs specialises in designing solid-state drive (SSD) technology for large cloud data centres.

CNEX had counter sued Huawei, and alleged that Huawei had improperly obtained CNEX trade secrets and used its relationship with a Chinese university to improperly access the start-up’s SSD technology.

And now according to Reuters, a US jury on Wednesday cleared CNEX of stealing trade secrets from the Chinese firm.

The jury also ruled that Huawei had misappropriated CNEX’s secrets, but they awarded CNEX no damages against the Chinese giant.

A CNEX spokesman told Reuters that the jury had not awarded it any damages because it did not have any revenue.

Meanwhile the jury did find that Ronnie Huang had failed to notify Huawei of his patent filings. They said that he had breached his employment contract requiring him to notify the company of any patents he obtained within a year of leaving the firm. However, the jury did not award Huawei damages.

“This is a victory for the rule of law and for global standards of ethical corporate behaviour,” said CNEX General Counsel Matthew Gloss. “This case was never about money.”

Huawei meanwhile feels that the results were mixed, and it is reviewing the decision and considering its next moves, according to Tim Danks, a Huawei VP for risk management.

Other battles

It is worth noting that besides the federal ‘national security’ legal battle that Huawei is currently engaged in, the Chinese firm is also fighting a court case in a federal court in Seattle, after two Huawei units were charged with conspiring to steal T-Mobile US trade secrets between 2012 and 2014.

Huawei is also embroiled in a legal battle in Canada, after CFO Meng Wanzhou was arrested in early December by Canadian authorities for alleged sanction busting with Iran.

Wanzhou is fighting the Canadian government for unlawful searches of her devices, and her arrest.

The Chinese firm is also vigorously contesting her extradition to the United States, where she is facing 23 charges.

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Author: Tom Jowitt
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