US startup claims HUAWEI exec stole trade secrets

CNEX Labs, a Silicon Valley startup, has accused HUAWEI executive Eric Xu of conspiring to steal trade secrets. The revelation, made public by a pending court case, has nothing to do with HUAWEI’s larger and more pressing issues with the U.S. government. Instead, it appears to be part of a tit-for-tat pair of dueling lawsuits that have been in the works for several years.

The trouble began in 2013.

Engineer Yiren Huang left HUAWEI in 2013 and formed CNEX, a company that builds solid-state drive technology. The larger corp. filed a lawsuit against Huang in 2017, alleging that Huang had poached HUAWEI employees and used the Chinese giant’s patents to kickstart CNEX’s product line. CNEX filed a retaliatory lawsuit with the claim that HUAWEI was using its lawsuit as a ploy to gather more data about CNEX.

CNEX’s case against HUAWEI is scheduled to kick off June 3 in Texas. Court documents seen by the Wall Street Journal show that Xu “directed a HUAWEI engineer to analyze CNEX’s technical information.” The engineer in question is said to have acted as a prospective CNEX customer in an attempt to garner more information about CNEX’s inner workings.

The smaller company also alleges that Xu was aware of an effort to glean data from a CNEX memory board obtained by Xiamen University. Xu’s lawyers conceded that Xu was “in the chain of command that had requested” details concerning CNEX, though they insist no trade secrets were ever stolen.

It’s not clear when HUAWEI’s case against CNEX will get under way.

Given the events of the last seven days, HUAWEI likely isn’t too concerned with the outcome of this small Texas trial. The company’s handset business is on the brink of destruction thanks to a ban levied against it by the Trump administration. With key partners such as Arm, Google, Intel, and Qualcomm backing off, HUAWEI has much bigger fish to fry at the moment.