In a previous article, we looked at the “two Michaels,” Canadians detained in China since 2018, whose closed-door trials coincided with the U.S–China summit in Alaska. At the center of the controversy is Huawei Technologies, the largest global telecommunications provider. Equipment from China’s Huawei Technologies and ZTE is banned on the U.S.’s 5G network because it poses a national security risk.
Due to the National Intelligence Law passed in China in 2017, Chinese companies are beholden to the Communist Party of China, such that if the CCP wants to spy on individuals, private firms, or government facilities that use routers, cell phones, computers, cables, and other telecommunications equipment, then the company must provide it with the information. The Center for Strategic & International Studies (CSIS), a non-partisan group that looks at cybersecurity, says that Huawei poses a threat that goes beyond espionage and intellectual property theft: Potentially, the CCP could order Huawei to shut down internet or cell service for any of their clients.
Stealing Its Way to the Top
Earlier we looked at how Huawei stole intellectual property from Canada’s once world-class Nortel, which most likely led to the company’s demise. But Nortel wasn’t the only company that Huawei targeted. A Wall Street Journal headline reads, “Huawei’s yearslong rise is littered with accusations of theft and dubious ethics.”
Huawei’s accusers describe a wide-ranging, brazen, and opportunistic appetite: the targets of the alleged thefts range from longtime tech peers, including Cisco Technology Inc., and T-Mobile US Inc., to a musician in Seattle barely making minimum wage in his day job.
Theft and industrial espionage are relatively common in the global tech industry, and Huawei isn’t the sole company to face accusations of stealing foreign intellectual property. What set Huawei apart, its accusers say, was the flagrancy of its plagiarism.Chuin-Wei Yap and Dan Strumpf in Hong Kong with Dustin Volz, Kate O’Keeffe and Aruna Viswanatha in Washington, “Huawei’s Yearslong Rise Is Littered With Accusations of Theft and Dubious Ethics” at Wall Street Journal (May 25, 2019)
Let’s take a look at Huawei’s track record, as chronicled by the Wall Street Journal.
In the early oughts, Huawei built an office across the street from telecom rival Ericsson in Stockholm. For four years Huawei did business there as “Atelier” so it wasn’t obvious that Huawei was scoping out the competition:
“They spent all their resources stealing technology,” said Robert Read, a former contract engineer from 2002 to 2003 in Huawei’s Sweden office. “You’d steal a motherboard and bring it back and they’d reverse-engineer it.”Chuin-Wei Yap and Dan Strumpf in Hong Kong with Dustin Volz, Kate O’Keeffe and Aruna Viswanatha in Washington, “Huawei’s Yearslong Rise Is Littered With Accusations of Theft and Dubious Ethics” at Wall Street Journal (May 25, 2019)
It was also in 2003 that Huawei was first sued over theft of intellectual property. Cisco Systems, Inc., accused Huawei of stealing software, router technology, and even plagiarizing its user manuals, spelling errors and all:
“Huawei couldn’t release its routers for shipment until it fixed a substantial number of the common Cisco bugs contained in the Huawei routers” for fear of giving away the plagiarism, said former Huawei human resources manager Chad Reynolds in a court filing.Chuin-Wei Yap and Dan Strumpf in Hong Kong with Dustin Volz, Kate O’Keeffe and Aruna Viswanatha in Washington, “Huawei’s Yearslong Rise Is Littered With Accusations of Theft and Dubious Ethics” at Wall Street Journal (May 25, 2019)
The Journal notes that Huawei was suspected of stealing from other companies too but few were willing to sue because they didn’t want to lose money from business partnerships with Huawei. Cisco has had its own public relations problems after documents showed that the company hoped to profit from Chinese government’s then-new “Golden Shield” project, better known today as China’s “Great Firewall” of censorship.
Another milestone in Huawei’s history of stealing intellectual property was in 2009. Huawei stole antenna technology from Quintel Technology, Ltd., after Huawei had proposed a business partnership. Quintel sued and eventually settled. According to the WSJ, this technology is a key ingredient of 5G technology.
In 2010 Motorola, Inc., sued Huawei when it discovered that former employees were sending documents to Huawei for a new mobile base station. One former employee was arrested at O’Hare International Airport in Chicago with more than 1,000 documents. She was on her way to Beijing on a one-way ticket. Notably, Motorola was divided into two distinct public companies, Motorola Mobility and Motorola Solutions. Motorola Mobility was bought by Google in 2012 and then sold to China’s Lenovo in 2014 .
In 2017 T-Mobile successfully sued Huawei for stealing information on a robot called Tappy that the company uses to test cell phones. The investigation revealed that stealing T-Mobile’s intellectual property was a company-wide effort on the part of Huawei:
In July 2013, even as it argued that the Tappy incident was the result of a couple rogue employees, Huawei China launched a formal policy of awarding bonuses to employees who stole confidential information from competitors. It emphasized, the indictment says, “that no employees would be punished for taking actions in accordance to the policy.”Laurel Wamsley, “A Robot Named ‘Tappy’: Huawei Conspired to Steal T-Mobile’s Trade Secrets, Says DOJ” at NPR (January 21, 2019)
The information from the T-Mobile suit is part of the U.S. Department of Justice’s current charges against Huawei with respect to the theft of trade secrets, wire fraud, and obstruction of justice. The Department of Justice lawsuit also includes Meng Wanzhou’s fraud case, which intersects with the fate of the “Two Michaels.”
Also in 2014, two individuals had their intellectual property stolen by Huawei. One was Rui Oliveira, a Portuguese multimedia producer who met with Huawei to sell his idea for a 360-degree smartphone camera. Instead, Huawei stole the idea without giving Oliveira compensation. Paul Cheever’s YouTube song “A Casual Encounter” became one of the default rings on Huawei’s phones. He never received compensation either.
In 2017, CNEX labs, a chip startup company that is backed by Microsoft and Dell, accused Huawei of stealing its solid-state disk storage technology. An engineer from Huawei posed as a potential customer to obtain information on CNEX’s technology. Huawei worked with Xiamen University to obtain additional technology from CNEX. One of CNEX’s co-founders and several of its employees are former Huawei employees. The co-founder had left Huawei’s U.S. office when he was asked to sign away his pre-existing intellectual property to Huawei’s research arm, Futurewei.
That brings us to the 2018 arrest of Huawei executive Meng Wanzhou and the U.S placing Huawei on the U.S. Entities list in 2019 for violating sanctions on Iran. By the end of 2019, Huawei was the biggest global telecommunications provider and was set to provide equipment for 5G networks in several countries, including the UK.
Then 2020 came along and things changed for Huawei.
Next: How 2020 changed Huawei’s fortunes
Note: For an overview of the ban on Huawei’s technologies, see CNET’s Huawei Ban Timeline.
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