Huawei and CNEX Labs accuse each other of stealing secrets

Huawei Technologies Co. and Silicon Valley startup CNEX Labs Inc. each accused the other of stealing technology related to data storage at the beginning of a trial in which the Chinese telecom giant is seeking to persuade a American jury of its innovation prowess.

CNEX co-founder “Ronnie Huang walked out the door with trade secrets which Huawei spent millions and millions of dollars to develop,” Huawei lawyer Clyde Siebman told potential jurors Monday at a federal courthouse in eastern Texas.

Huawei has it backward, CNEX’s lawyer, Deron Dacus told the potential jurors. “CNEX took nothing from Huawei,” he said. “This case is really about what Huawei took from CNEX.”

The dueling views of what happened during the two years that Yiren “Ronnie” Huang worked for Huawei will be presented over what’s expected to be a three-week trial in Sherman, Texas, about an hour north of Dallas. Outside the courtroom, Huawei is at the center of a global battle between the U.S. and China that’s sucked in political allies and businesses.

It’s a rare instance of Huawei accusing someone of stealing its secrets. The Chinese maker of networking gear is fighting allegations from the Trump administration that it stole critical phone-testing technology from T-Mobile USA Inc. Huawei has denied wrongdoing.

The dispute in Texas is over solid state drives, which are made up of chips called Nand flash memory that store information on semiconductors. They access data much more quickly than traditional magnetic disk-based technology.

Huang, who had worked in the field for decades, was hired at Huawei’s FutureWei unit in Santa Clara, California, in January 2011 to oversee a group researching storage techniques that could be integrated into Huawei’s networking products.

Huawei said that it hired Huang for his expertise only for him to start a competing firm with proprietary information developed at the company. Other former Huawei employees also left to work at CNEX.

Huang said his hiring was a ruse so Huawei could steal his know-how. “He has done nothing wrong,” his lawyer, Bryan Kohm, told the potential jurors.

District Court Judge Amos Mazzant let the lawyers for all three sides — Huawei, CNEX and Huang — present preliminary statements to the jury pool before the eight-member jury was selected.

Mazzant is also overseeing a Huawei lawsuit against the U.S. government. The company is asking the judge to rule that a ban on federal agencies and contractors buying its gear is unconstitutional.

Huawei and CNEX have been aggressive in their accusations against one another. In a court filing, CNEX lawyers claimed a high-ranking Huawei executive led the effort to steal Huang’s technology, and the firm’s general counsel Matthew Gloss claims Huawei “has tried to bury us with litigation.”

CNEX has the backing of a Republican congressman whose Texas district is to the west of Dallas. Representative Mike Conaway called it “yet another example of a Chinese company, backed by the Chinese Communist government, attacking American businesses in our own court system.”

Huawei called CNEX’s statements about the Huawei executive “unsubstantiated” and said it was “confident the full facts will vindicate Huawei from these misleading claims.”

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Huawei and CNEX Labs accuse each other of stealing secrets