June 4, 2019
By Bruce Tomaso
SHERMAN, Texas (Reuters) – A former engineering manager used Huawei Technologies Co Ltd trade secrets and lured away 24 of its employees to improperly build his startup company, a lawyer for the Chinese telecommunications firm told a Texas jury on Tuesday.
The trade secrets trial, which has become a flashpoint in allegations by the United States government that Huawei gear is a threat to U.S. security, began with the Huawei lawyer showing jurors that spelling errors in its internal documents were repeated in proposals a former manager used to start chip-maker CNEX Labs Inc three days after leaving Huawei.
Huawei sued former employee Ronnie Huang and his startup, CNEX Labs Inc, and Huang countersued saying that Huawei’s allegations against him and CNEX are tactics in a strategy Huawei uses to steal technology from others. CNEX develops chips that speed up data storage on cloud computing networks.
In addition to showing identical spelling errors in Huawei and CNEX documents, Huawei lawyer Michael Wexler also played an excerpt from a video deposition in which another former employee admitted to copying 5,760 files from his work computer before leaving to join CNEX.
Huang started CNEX in 2013 and has raised more than $100 million from backers including arms of Dell Technologies and Microsoft.
The trial promises to keep Huawei in the spotlight amid a U.S. government blacklisting of the company’s telecommunications gear and pressure on U.S. allies not to buy its equipment. China last week retaliated against the ban, saying it planned to draft its own list of foreign companies and people it considers “unreliable” for harming Chinese companies.
Huang’s attorney will lay out a rebuttal and counterclaims in court later on Tuesday. The trial is expected to last three weeks.
“Think of the spelling mistakes as DNA,” Huawei attorney Wexler said in his opening statement to an eight-person jury in U.S. District Court for the Eastern District of Texas.
Huawei is asking the court to award it at least $85.7 million in damages.
Judge Amos Mazzant, who is hearing the case, separately is overseeing Huawei’s bid to overturn the Trump administration’s ban on its sales to government agencies and contractors.
(Reporting by Bruce Tomaso; writing by Gary McWilliams; editing by Grant McCool)