Blog Post

Updated: One More IP Infringement Suit: Huawei vs. Motorola

The mobile lawsuits keep on coming. But this latest fight does not have to do with mobile handsets, or with patented technology being used without permission: Chinese vendor Huawei is suing Motorola (NYSE: MOT) to prevent the company from transferring Huawei intellectual property to Nokia (NYSE: NOK) Siemens Networks, which bought Motorola’s wireless network business last year for $1.2 billion.

This latest suit highlights the problems of vendors collaborating while at the same time competing, and also how tight competition becomes when mobile equipment companies consolidate. It also leads one to wonder, if the level of competition is as strong as Huawei portrays it to be, whether some of Huawei’s IP was actually part of the reason for the purchase by NSN in the first place.

Huawei says it has had a “cooperative relationship” with Motorola since 2000, when Motorola began to resell Huawei wireless network products to customers under the Motorola brand.

As part of that agreement, Huawei shared confidential IP with the U.S. vendor.

When Motorola announced that NSN would be buying its wireless networking business in July 2010, Huawei said that it tried to get confirmation from Motorola that it would not transfer any of that information to NSN, which Huawei views as a key competitor in wireless networking.

“Motorola, however, has not responded with assurances that it will prevent disclosure of that information to NSN,” Huawei writes in a release. More specifically, in the suit, Huawei is now accusing Motorola of a “misappropriation of trade secrets, copyright infringement, and breach of contract,” and is now seeking a preliminary injunction to prevent “irreparable harm to Huawei.”

Although Motorola resold Huawei products for a number of years, this is not the first instance of tension between the two companies. Last year, Motorola brought a suit against some of its former employees, alleging that they had taken Motorola IP and shared it with Huawei in China in an act of industrial espionage. That case had originated in 2008.

Huawei has also been at the receiving end of intellectual property theft accusations with other vendors, too — for example being sued by Cisco (NSDQ: CSCO) for IP theft in 2003. Huawei has always denied these claims.

We have reached out to Motorola Solutions — which is managing the sale of the network assets to NSN — for its response to today’s lawsuit.

Update: Nicholas Sweers, VP for global communications for Motorola Solutions, emailed us the following statement: “We believe this lawsuit is without merit,” he wrote. “As previously stated, we are targeting to complete the sale of our Networks business to NSN in early 2011 following receipt of approval from China’s antitrust authorities.”

A link to the official complaint in the U.S. District Court for the Norther District of Illinois, Eastern Division, can be read here (PDF download).