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Solid State Drive Trade Secrets Behind Latest Huawei Case

by Chris Brook on Tuesday September 10, 2019

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Prosecutors in the U.S. are pursuing criminal charges against a Chinese professor after he purportedly took trade secrets to benefit Huawei. The case is yet another instance of the Department of Justice taking its investigation around Huawei, not to mention the theft of trade secrets, seriously.

The U.S. government has fired yet another warning shot as part of its ongoing battle with Chinese telecom behemoth Huawei, charging a visiting Chinese professor with wire fraud after he allegedly took trade secrets from a Silicon Valley company to benefit the telecom.

As Reuters reported on Monday, Bo Mao, an associate professor at Xiamen University in China, was charged with conspiracy to commit wire fraud last month after allegedly trying to defraud a technology company in California three years ago.

According to two complaints, one filed in the United States District Court of the Eastern District of New York and another in the United States District Court for the Northern District of Texas, Mao worked with a Chinese telecom conglomerate - Huawei - to harvest information on solid state drives from an unnamed California company, San Jose-based startup, CNEX Labs Inc.

While Huawei isn't specifically named in the complaints, nor is it being charged in this case, reports, including Reuters, all but confirm the company's involvement. CNEX isn't named in the Texas complaint but the allegations mirror those made by CNEX in a civil suit. A U.S. federal jury ruled in that case that Huawei Technologies Co. misappropriated CNEX Labs Inc.'s trade secrets.

The Texas complaint alleges that Mao had access to technology - an Open-Channel SDK Board for solid state drives - and despite agreeing he wouldn't, used that access to help benefit Huawei.

According to the document, Mao got CNEX, a company that bills itself as a leading innovator for semiconductor storage, to send him a circuit board for a research project he was overseeing while working at the University of Texas – Arlington.

According to the complaint, at the end of 2016, CNEX was the only company to develop circuit boards with an embedded software development kit, or SDK that includes an integrated chip containing an open-channel controller. As each board contains the company's intellectual property – software and hardware - CNEX required third parties to enter into licensing and non-disclosure agreements before taking them from the company.

Mao told the company he was going to use the board solely for academic research and that he wouldn't reverse engineer it, make modifications to it, or disclose or transfer it to third parties, like Huawei - but the DoJ alleges he did just that.

It's not the first tiff between CNEX and Huawei; the latter sued the former over the theft of trade secrets in 2017 after one of its employees, a former engineering manager at a U.S. left to start CNEX three days after leaving the company; CNEX responded with a suit of its own. Litigation around that case ultimately came to a "take nothing" judgment for both sides, meaning each party had to pay its own costs, following a 17-day trial.

The case is just the latest in a long line of stories involving Huawei and its fractured relationship with the U.S.

The U.S. formally charged the company with fraud, theft of trade secrets, violating sanctions, and breaking confidentiality agreements earlier this year. That action was spurred by the company allegedly violating U.S. sanctions on Iran and stealing trade secrets around a robot that T-Mobile uses to test mobile phones.

Hard drives photo via Scott Schiller's Flickr photostream, Creative Commons

Tags:  Data Theft IP theft

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