Huawei trade secrets lawsuit opens in Texas amid spying allegations

*Trial in Texas centers on technology for data storage
devices
*Huawei is in the center of battle between China and the U.S.

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.”

The case is Huawei Technologies Co. v. Huang, 17-893, U.S.
District Court for the Eastern District of Texas (Sherman)

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