Huawei ex-employees accused of theft

BEIJING: Police in southern China have arrested three engineers who worked for telecoms equipment giant Huawei Technologies, a firm already embroiled in a copyright lawsuit with Cisco, for stealing commercial secrets, a spokesman said on Monday.

The three were held in the southern boomtown of Shenzhen, where privately held Huawei Technology Co Ltd is based, the firm's spokesman Fu Jun told Reuters by telephone.

"They were arrested in June suspected of stealing commercial secrets," he said.

Relatives of the three said in a statement that they did not copy Huawei's technology, but were detained without evidence for months before being charged.

Industry watchers said the case underscored the murky nature of commercial law in China and the consequences of running afoul of a powerful homegrown firm such as Huawei, founded in 1988 by former People's Liberation Army officer Ren Zhengfei.

They said the case, ironically, boded well for Cisco Systems Inc in its continuing intellectual property lawsuit against Huawei.

Fu said the three, who resigned from Huawei in July 2001, founded a firm called Shanghai Huke Technology Co to make optical transmission equipment.

The firm sold some networking equipment to the city of Jiamusi in the northern province of Heilongjiang province. Huawei reported the case to Heilongjiang police last October, he said.

The three were arrested in the eastern province of Zhejiang in November and moved to Shenzhen one month later, he said.

UTSTARCOM

Nasdaq-listed network equipment maker UTStarcom Inc, which acquired some of Shanghai Huke's assets and employed the three men at the time of their detention, said there was no theft of intellectual property.

UTStarcom said in statement it was not involved in the investigation, but believed the men were innocent.

"Because the dispute happened before UTStarcom acquired part of Huke, the issue has no legal relationship with our company. It will not have any impact on our company," it said.

The firm said it had employed experts to certify that Huke's products were self-developed and did not infringe on Huawei's intellectual property.

Gu Wenjie, a telecoms analyst at Beijing-based MFC Insight, said the case arose because Huawei was alarmed at a steep slide in its market share, prompted by a previous policy of encouraging employees to start their own businesses.

"They went after the small fish, not the big fish who could spill a lot of Huawei secrets," he said. "This is great for Cisco in its lawsuit against Huawei. You can't just copy people and go after others for copying you."

Huawei, which has formed a joint venture with network equipment maker 3Com Corp, as been mulling a listing for some of its assets.

© Reuters