US charges Huawei with racketeering and conspiracy to steal trade secrets

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The US Department of Justice has charged today Huawei and four of its subsidiaries with racketeering and conspiracy to steal trade secrets.

The new charges today represent an escalation in the US’ legal battle against the Chinese telecommunications giant.

The US first charged Huawei and its CFO in January 2019.

Initial charges included money laundering, conspiracy to defraud the United States, obstruction of justice, and sanctions violations.

Today, the US added new charges, and expanded the defendants list, which now includes Huawei CFO Wanzhou Meng, Huawei, and four official and unofficial subsidiaries — Huawei Device Co. Ltd. (Huawei Device), Huawei Device USA Inc. (Huawei USA), Futurewei Technologies Inc. (Futurewei) and Skycom Tech Co. Ltd. (Skycom).

Huawei CFO Wanzhou Meng was arrested on the initial charges last year in Canada. Meng is still fighting her extradition to the US.

New charges

The US DOJ claims it uncovered a “decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei’s business.”

The DOJ says stolen information includes trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology and robot testing technology.

“The means and methods of the alleged misappropriation included entering into confidentiality agreements with the owners of the intellectual property and then violating the terms of the agreements by misappropriating the intellectual property for the defendants’ own commercial use, recruiting employees of other companies and directing them to misappropriate their former employers’ intellectual property, and using proxies such as professors working at research institutions to obtain and provide the technology to the defendants.”

Investigators also claim that Huawei ran a bonus program to reward employees who obtained confidential information from competitors.

The DOJ says Huawei’s efforts were successful, allowing the company to cut research and development (R&D) costs and gain an advantage over its competitors.

US officials say Huawei then reinvested the profits it made from the stolen information to boost its own business, including in the US.

The DOJ says that when US officials confronted the company about its practices, the company lied to US officials, the FBI, and to representatives from the US House Permanent Select Committee on Intelligence.

One of the alleged lies included statements from Huawei that Skycom was not one of its subsidiaries.

“In fact, the indictment alleges Skycom was Huawei’s unofficial subsidiary that, among other services, assisted the Government of Iran in performing domestic surveillance, including during the demonstrations in Tehran in 2009,” DOJ officials said today.

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