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Huawei Said to Be Under U.S. Investigation in Trade-Secrets Case


WASHINGTON — Federal prosecutors in Seattle are investigating Huawei, the Chinese technology giant, on allegations of intellectual property theft, according to two people familiar with the case.

The criminal investigation is related to a civil suit between Huawei, one of the world’s largest telecommunications equipment and smartphone makers, and the telecom provider T-Mobile, according to the two people, who requested anonymity because they were discussing an active investigation.

In that civil case, filed in 2014, Huawei was accused of stealing intellectual property related to a robot that T-Mobile used to diagnose quality control issues in mobile phones. A jury found Huawei guilty in May 2017.

The criminal inquiry is looking at some of the same issues as the civil case, according to one of the people with knowledge of the investigation.

Lawmakers are also pressuring Huawei. A new bill introduced on Wednesday would ban the export of American technology to Chinese telecommunications companies that have broken U.S. sanctions, including Huawei and its smaller Chinese rival ZTE.

Because the companies make wide use of an array of American parts, like microchips, the bill could have a major impact on their business. A similar ban last year, following a finding that ZTE had violated American sanctions, effectively shut the Chinese company down before the Trump administration lifted it.

“Both companies have repeatedly violated U.S. laws, represent a significant risk to American national security interests and need to be held accountable,” said Chris Van Hollen, a Democratic senator from Maryland and one of the sponsors of the bill, in a statement.

The bill, called the Telecommunications Denial Order Enforcement Act, was also sponsored in the Senate by Senator Tom Cotton, a Republican from Arkansas. In the House of Representatives, it was sponsored by Mike Gallagher, a Wisconsin Republican, and Ruben Gallego, an Arizona Democrat.

The charges in Seattle had hung over Huawei for much of last year, as various other crises were unfolding for the company. The charges were due to pass the statute of limitations last year, but the case was extended.

In plea negotiations last year, Huawei faced the prospect of pleading guilty to a criminal charge of theft of a trade secret and agreeing to some sort of compliance plan, according to one of the people who spoke on the condition of anonymity.

If the case is resolved with a plea agreement, Huawei will most likely plead guilty to a criminal charge of theft of a trade secret and have to agree to some sort of compliance plan, the person said.

Huawei is a banner for immense national pride in China. But the United States has long eyed the company with suspicion. Large American cellular carriers have shunned Huawei’s gear for many years.

Pressure on the company has risen sharply over the last year. The authorities in Britain, the Czech Republic, Canada and elsewhere have taken a more critical look at Huawei as mobile carriers prepare to upgrade the technology in their networks. Australia has already barred the company from providing equipment to support its fifth-generation, or 5G, wireless networks.

Huawei executives have longed denied that the company acts on behalf of any government. But American counterintelligence agents and federal prosecutors have for some time explored possible cases against the company’s leadership.

The T-Mobile lawsuit was not the first time Huawei had been accused of stealing intellectual property. In 2003, the company admitted it had stolen portions of the software that runs computer networking equipment from Cisco Systems, one of the largest tech companies in Silicon Valley.

Cisco dropped a patent infringement lawsuit in exchange for a promise from Huawei to modify some of its products.



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