Report: The Feds are preparing to deal with theft against Chinese technology giant Huawei

Huawei founder Ren Zhengfei meeting with journalists on January 15, 2019 in Shenzen, China.
Photo: Vincent Yu (AP)

The prosecution "prosecutes a criminal investigation" by Chinese tech giants Huawei for allegedly stealing the trade secrets of US companies. The case was partly based on allegations in civil litigation, the Wall Street Journal reported Wednesday.

Investigators are particularly interested in a lawsuit between Huawei and T-Mobile in 2014, which led to a Seattle jury blaming the former person for stealing designs and parts for a secret mobile phone test robot last year. The device, nicknamed "Tappy," allegedly caught the eye of Huawei after T-Mobile hired the company to supply cell phones:

In an alleged case, two Huawei employees have pushed a third employee into a test lab to take unauthorized photos of the robot. An employee also attempted to hide the finger-like tip of "Tappy" behind a computer monitor so that he was kept away from a surveillance camera, and then tried to sneak the tip out of the lab in his laptop computer case

The employee later admitted that he had taken over the component because Huawei's research and development bureau believed the information would improve their own robot.

Huawei argued in court that "Tappy" is no secret, the Journal wrote, with videos from the robot on YouTube and extensive technical information "that has already been published in numerous patents." However, Huawei lost the case with 4.8 million US dollars. The jury's decision on the incident was a breach of contract. T-Mobile has been labeled a victim in a series of similar attempts to steal technology.

The Journal wrote that sources familiar with the investigation are at an advanced stage and are approaching a possible charge; Neither the Department of Justice nor Huawei agreed to comment on the newspaper's record. Bloomberg later reported Wednesday that his own sources confirmed the story.

In the US, which is currently in a trade war with China, Huawei is already facing a full review. This includes the Canadian authorities arresting their chief of finances (and the daughter of his founder Ren Zhengfei) Meng Wanzhou on charges of extradition. Separate allegations that Huawei might be spied on behalf of Chinese intelligence have resulted in the US banning the use of its technology for government work and prohibiting it from installing telecommunications equipment in key markets. Other restrictions were imposed by some US allies.

However, US intelligence and cybersecurity officials have not published any hard evidence of Huawei's espionage (a fact recently noted by Chief of the Federal Office for Information Security, Arne Schoenbohm).

As the Journal noted, there is growing pressure in Congress to pass legislation prohibiting the export of US products to companies that violate international sanctions - with Huawei and Chinese technology company ZTE clearly the target. Ren himself gave a "rare public appearance" on Tuesday, the Journal reported separately, to deny the espionage claims strongly:

"No law requires a company in China to set up compulsory backdoors," said Ren Zhengfei, according to the Journal. "Personally, I would never interfere with my customers' interests, and my company would not respond to such requests."