U.S. Charges Huawei with Racketeering, Trade Secret Theft

Posted on February 13, 2020 by Paul Thurrott in Cloud with 33 Comments

The U.S. government on Thursday charged Chinese telecommunications giant Huawei with racketeering and trade secret theft. This is in addition to the blacklisting that prevents the firm from doing business with U.S.-based partners.

“The new charges in this case relate to the alleged decades-long efforts by Huawei, and several of its subsidiaries, both in the U.S. and in the People’s Republic of China, to misappropriate intellectual property, including from six U.S. technology companies, in an effort to grow and operate Huawei’s business,” a U.S. Department of Justice press release explains. “The misappropriated intellectual property included trade secret information and copyrighted works, such as source code and user manuals for internet routers, antenna technology, and robot testing technology.”

According to the DOJ, Huawei repeatedly entered into confidentiality agreements with the unnamed victimized companies in order to steal their intellectual property, steal employees to misappropriate information from their former employers, and use researchers, professors, and other proxies to obtain and steal IP from other companies. Huawei allegedly instituted an internal bonus program that awarded employees who were able to steal IP from its competitors.

The DOJ says that Huawei’s efforts were successful, and that it was able to drastically cut its own research and development costs and come to market more quickly, giving it “a significant and unfair competitive advantage.”

The government also alleges that Huawei does business with countries like Iran and North Korea that are sanctioned by the United States, European Union, and/or the United Nations. Huawei’s activities in those countries were allegedly handled through local affiliates, and they were given codenames, like A2 for Iran and A9 for North Korea, in corporate communications.

Amusing, the DOJ also notes that the charges “are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.”

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Comments (34)

34 responses to “U.S. Charges Huawei with Racketeering, Trade Secret Theft”

  1. lvthunder

    What's so amusing about the DOJ saying Huawei has due process rights?

  2. Paul Thurrott

    Guys, seriously.

    Please don't attack each other or spew nonsense.

  3. codymesh

    "Huawei allegedly instituted an internal bonus program that awarded employees who were able to steal IP from its competitors."

    lol. Okay, sure.

  4. Patrick3D

    It's bi-partisan. House Speaker Nancy Pelosi urged countries on Friday to avoid investing in Huawei Technologies Co., China’s largest telecom firm, when building their new cellular networks, warning that to do so would be to “choose autocracy over democracy.”

  5. delicieuxz

    In reply to Stooks:


    Hmm. What part of what I posted gave you the impression that I am Russian? I'm not, but I'd be curious to know, anyway.

    Do you always identify people who speak the truth as being Russian? And if speaking the truth is a giveaway that a person is Russian, doesn't that give great credit to Russia and mean that we need a lot more Russian posters online?

    Or, are you simply another no-wit troll who resents the truth being spoken? Hmm, indeed.

    BTW, from the US federal court's July 2019 ruling in the proceedings for USA v. Concord Management:

    “At the conclusion of the hearing, the Court ordered the parties “to abide moving forward by Local Criminal Rule 57.7(b)” and ordered the government “to refrain from making or authorizing any public statement that links the alleged conspiracy in the indictment to the Russian government or its agencies.” May 28, 2019 Hr’g Tr. at 47–48. The Court further ordered that “any public statement about the allegations in the indictment . . . must make clear that, one, the government is summarizing the allegations in the indictment which remain unproven”

    “The Court cautions the government that any future violations of Rule 57.7 or the Court’s May 29, 2019 Order will trigger a range of potential sanctions. See ABA Standards for Imposing Lawyer Sanctions § 6.2 (listing the sanctions of “admonition,” “reprimand,” “suspension,” and “disbarment” as potential responses to an attorney’s violation of a court order, depending on the severity of the violation (capitalization omitted)).”

  6. rm

    I assume the US Government has disassembled Huawei code to verify code theft. Must have people willing to testify to the other allegations.

    • delicieuxz

      In reply to RM:

      I don't count on that.

      The US government has been coming at Huawei from many angles, with a goal being to cut-off the company from as many markets as possible, particularly concerning Huawei's 5G. But it hasn't worked so far: Despite the US' accusations and criminal charges, Huawei continues to be approved to keep developing their technology around the world, including in some of the US' closest partner countries.

      Once Huawei's 5G is developed, it'll probably too late for the US to do anything about it, and the US government's existing charges against Huawei might take years to be concluded in court. One move the US government can still try is to ratchet up the number and seriousness of its charges against Huawei, with the tactic being that it doesn't matter whether they're true or not (from the perspective of the goal of the US government) because if the mere allegations influence other countries to not allow Huawei 5G development, then somebody else will develop 5G in those places and by the time the accusations are found to be meritless (if they are) it will be too late for Huawei to still have 5G presence in those countries.

      If, from the perspective of the US government, the goal of the charges is simply to prevent Huawei 5G from being constructed in as many countries as possible, then it doesn't matter whether the accusations are true or not, it only matters if they result in other countries choosing to have somebody else develop 5G for them while Huawei fights the charges in court.

      The US doesn't have a good track record for being able to back-up its claims. Its track-record is actually comprehensively of the opposite.

    • Stooks

      In reply to RM:

      We will never know. In would be in the interest of the US Government not to disclose that information.

  7. wright_is

    The US Government is like the child that cried WOLF!

    They have made dozens of allegations over the last couple of years, without being able to back them up.

    Now it just sounds like desperation, although there could be something behind this one. But people have become so weary of the US Government in Jumping Chimpanzee mode, that it will be hard for them to get people to believe the accusations, even if they are true.

  8. wp7mango

    Is the US government going after any other Chinese company or just Huawei?

    The US government needs to tread carefully because this could backfire. Huawei is probably more than capable of exposing US government activity in hacking, espionage and racketeering.

  9. delicieuxz

    But the US state also alleged that Russia was conducting social media activities relating to the 2016 presidential election. And then the matter went to court, the defendants showed up and Mueller panicked and asked the judge to delay the trial because he hadn't expected them to, and later the judge ordered that Mueller and the government are no longer allowed to claim that Russia is linked to any social media activities related to the US election and that Mueller's claims are "unproven". And the judge also threatened Mueller with disbarment if he continued to assert Russia was involved (a detail not much reported in US news).

    So, there is a major difference between the US state making an allegation, and the allegation having clear merit to it. The US state makes accusations against its geopolitical rivals as a political tactic and for the purpose of propaganda.

    At the same time, in the previous few days, it was revealed that the CIA has been spying on the most secret communications of over 120 countries, including its allies and adversaries alike, through a Swedish cryptography company it covertly bought. It's being called by Washington Post "the intelligence coup of the century".

    And then there are the WikiLeaks Vault 7 documents, which are leaked CIA documents showing that the CIA has hacked, backdoored, or infected most-all cellphones and routers, and a huge amount of popular software. Those documents also revealed that the US state pays software companies to put backdoors into their software. Other information has showed that all Windows software has been backdoored by the US state since at least 1999.

    The US state also records all information passing through its 8 (as of 2018) NSA spy hubs in Seattle, San Francisco, Los Angeles, Dallas, Chicago, New York, Washington DC, and Atlanta.

    The CIA documents leaked by Wikileaks also showed that when the CIA does a hack, they leave traces to make it appear as though it was done by China or Russia.

    Then there's Total Information Awareness, PRISM, XKeyscore, etc.

    So, really, the US state is merely accusing China of what it's already confirmed that the US state has been doing all along. But with the US state's track-record for making baseless accusations for the purpose of harming their rivals, there is room for a significant degree of skepticism about the US state's claims towards China or any other country.

    Here's a small selection of relevant articles:

    How the CIA used Crypto AG encryption devices to spy on countries for decades

    Crypto CIA spy op revelations makes us see US’ Huawei objections in a new light

    U.S. Agencies Said to Swap Data With Thousands of Firms

    Russian researchers expose breakthrough U.S. spying program

    NSA Built Back Door In All Windows Software by 1999

    Photos of an NSA “upgrade” factory show Cisco router getting implant

    How “omnipotent” hackers tied to NSA hid for 14 years—and were found at last

    NSA's use of 'traffic shaping' allows unrestrained spying on Americans

    The NSA’s Hidden Spy Hubs in Eight U.S. Cities

  10. lvthunder

    So what happens if they are found guilty? Those crimes usually come with jail time.

  11. illuminated

    Can't Huawei just buy a block of hotel rooms in certain hotels or do something nice? It is as if they do not know what to do or do not have any money. They are not poor, they can buy friends and justice.

  12. melinau

    I'm sure this is completely unrelated to Huawei claiming patent infringement against a variety of "Western" companies.

    The problem with vendettas is that they become irrationally focused on "winning" rather than achieving a beneficial outcome. Trump (sorry US Department of 'Justice') has failed to produce anything other than innuendo to date. It will be interesting to seehear their evidence in open court.

    On a different, but related issue: USA notions of 'Justice' don't necessary travel that well. USA frequently bullies its minions like UK into extraditing our citizens to USA on flimsy pretexts for trivial offenses , while refusing to extradite USA citizens against whom there are serious charges and lots of evidence. This somewhat undermines the credibility of the whole edifice, and that's BEFORE we take on board the 'Trump factor'.

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