UPDATE 2-Motorola sues Huawei for trade secret theft

* Motorola suit alleges theft of its trade secrets

* Huawei says lawsuit is groundless, will defend itself

* Such cases hard to prove from evidence standpoint-expert

* Suit comes as Huawei vies for legitimacy on world stage
(Adds lawyer comment, background)

By Phil Wahba and Melanie Lee

NEW YORK/SHANGHAI, July 21 (BestGrowthStock) – U.S. mobile phone
maker Motorola Inc (MOT.N: ) has sued China’s Huawei Technologies
Co [HWT.UL] for alleged theft of trade secrets, highlighting
the fast-growing Chinese firm’s difficulty in shaking the
nation’s reputation for piracy.

In an initial suit, filed in 2008, Motorola sued five of
its former workers for allegedly sharing trade secrets with
Lemko, which was also named in the suit and has a reseller
agreement with Huawei.

In the amended complaint, filed on July 16 in a federal
court in Chicago, Motorola claimed an engineer shared
information about a Motorola transceiver and other technology
with Huawei’s founder, Ren Zhengfei, a former officer in
China’s People’s Liberation Army.

Motorola claimed a string of emails tagged “Motorola
Confidential Proprietary” showed that “Huawei and its officers
knew they were receiving stolen Motorola proprietary trade
secrets and confidential information without Motorola’s
authorization and consent,” according to the suit.

Huawei said the lawsuit was groundless.

“Huawei has no relationship with Lemko, other than a
reseller agreement. Huawei will vigorously defend itself
against baseless allegations,” the company said in an emailed
statement.

Cases like these are hard to prove from an evidence point
of view, said Connie Carnabuci, a technology, intellectual
property expert and partner at Freshfields in Hong Kong.

“Cases involving misappropriation of proprietary
information are usually very difficult cases to run,” Carnabuci
said.

“This case is being brought in the courts of the United
States, one thing interesting is that decisions of the U.S.
courts are not enforceable in China,” she added.

Schaumburg, Illinois-based Motorola accused Huawei of
various violations including threatened or actual
misappropriation of trade secrets, breach of fiduciary duty and
usurpation of corporate opportunity.

Since at least 2006, Motorola had required its engineers to
sign a confidentiality agreement, according to the filing.

Motorola spokeswoman Jennifer Erickson said: “We don’t
comment on pending litigation, but will continue to vigorously
defend our IP (intellectual property).”

Lemko could not be reached for comment.

DIVERGING FORTUNES

Huawei and Motorola were once fierce rivals in China’s
fast-growing telecoms market, but their fortunes have diverged
in the last few years.

Over that time, Huawei has risen to become the world’s
second-largest seller of wireless telecoms equipment, notching
major sales not only in developing markets but also in
lucrative Western Europe markets.

Motorola, meanwhile, has seen its networking equipment
business struggle in recent years as its mobile phone business
also lost ground. It now looks poised to exit the networking
equipment business, announcing earlier this week it would sell
the unit to Nokia Siemens Networks [NSN.UL] for $1.2 billion.
[ID:nLDE66I02A]

Motorola’s ongoing case against Huawei comes as the Chinese
company is trying to push for legitimacy in the global arena
despite wariness from Western politicians over Ren’s government
and military ties.

In 2008, Huawei’s bid to buy U.S. firm 3Com fell through
after opposition from U.S. lawmakers.

The Motorola lawsuit has echos of another lawsuit Huawei
faced.

In 2004, Cisco Systems Inc (CSCO.O: ) agreed to drop a
drawn-out lawsuit against Huawei after the latter agreed to
make some product changes.

“There is a lot of attention amongst Chinese companies and
(multinational companies) doing business in China where people
are looking at their business practices and ways to minimize
unauthorized leakage of information,” Carnabuci said.

Investing Advice

(Additional reporting by Helen Chernikoff and Sinead Carew in
NEW YORK; Editing by Jacqueline Wong and Lincoln Feast)

UPDATE 2-Motorola sues Huawei for trade secret theft