Spelling errors, video show Huawei rival stole trade secrets, U.S. jury hears

SHERMAN, Texas (Reuters) – A former engineering manager used Huawei Technologies Co Ltd trade secrets and lured away 24 of its employees to improperly build his startup company, a lawyer for the Chinese telecommunications firm told a Texas jury on Tuesday.

The trial to decide a civil lawsuit began with the Huawei lawyer showing jurors that spelling errors in its internal documents were repeated in proposals the former manager, Ronnie Huang, used to start chip-maker CNEX Labs Inc three days after leaving Huawei.

Two years ago Huawei sued CNEX and Huang, who co-founded CNEX in 2013, seeking at least $85.7 million in damages and rights to its memory-control technology.

Huang, who countersued Huawei and denies the company’s allegations, testified in court on Tuesday that he did not recall or could not explain how documents used to promote CNEX included charts, diagrams and passages that were very similar to work he had done for Huawei.

The Chinese company has become a flashpoint in allegations by the United States government that Huawei gear is a threat to U.S. security. The U.S. government blacklisted the company and is applying pressure on U.S. allies not to buy its equipment.

China last week retaliated against the ban, saying it planned to draft its own list of foreign companies and people it considers “unreliable” for harming Chinese companies.

In addition to showing jurors the documents’ common misspellings, Huawei lawyer Michael Wexler played excerpts of a video deposition in which another former employee admitted to copying 5,760 files from his work computer before leaving Huawei to join CNEX.

“Think of the spelling mistakes as DNA,” Wexler said in his opening statement to an eight-person jury in U.S. District Court for the Eastern District of Texas. “Stealing technology is wrong.”

A CNEX attorney said the spelling errors were identical because Huang wrote all the documents. But when asked if he had cut and pasted confidential Huawei material into his own, Huang said: “It looks like it’s the same, but I don’t recall doing it.”

CNEX develops chips that speed up data storage on cloud computing networks. The countersuit by CNEX and Huang sought $24.5 million in damages from Huawei over development delays and lost future revenue.

“The things that Huawei claims are trade secrets are not,” CNEX attorney Deron Dacus said in his opening statement, describing the lawsuit as “bullying and intimidation.”

Huang has raised more than $100 million from backers including arms of Dell Technologies and Microsoft.

Judge Amos Mazzant, who is hearing the case, separately is overseeing Huawei’s bid to overturn the Trump administration’s ban on its sales to government agencies and contractors.