November 19, 2010    Volume 17, No. 18

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Motorola Accuses Its Top Chinese Competitor Of Infiltratrating Its Senior Executive And Technical Ranks


By Richard McCormack
richard@manufacturingnews.com

Motorola has met the enemy and the enemy is its own Chinese employees working clandestinely for China's largest telecommunications equipment manufacturer.

Motorola has filed suit in the U.S. District Court in Northern Illinois against more than a dozen former employees and two companies, one of which is Chinese telecommunications giant Huawei for stealing its proprietary intellectual property and selling products based upon its technologies.

More than a dozen former Motorola employees -- most of Chinese dissent -- are charged with creating their own U.S. front company with Huawei executives called Lemko. They did this while they were still full-time employees of Motorola, according to the suit. The case is in discovery phase until January 31, 2011, with dozens of lawyers trying to gain (or block) access to computer servers, hard drives, databases, files and e-mails. A trial date has been set for November 7, 2011. The trail is expected to last for weeks.

The employees, who held senior technical and management positions with Motorola, allegedly began systematically stealing proprietary information and source code from numerous Motorola telecommunications divisions. They fed this technology to Huawei through direct interactions with its founder Ren Zhengfei. In its lawsuit, Motorola describes Zhengfei as being "a former officer in the People's Liberation Army."

The employees used Motorola's source code, development tools and trade secrets "to develop and market a product, acquire investors, prepare and file patent applications, establish and run Lemko, and use Lemko to exploit and transfer Motorola proprietary information to entities in China and other parts of the world," says the suit.

In the suit's count against Huawei, Motorola says one of its full-time employees that is charged with stealing proprietary technology, Shaowei Pan, Motorola's senior engineer and director of architecture, met with Zhengfei in Beijing in 2001. Pan and four other Motorola employees involved in the suit were working on the company's "Seamless Mobility" initiative. They traveled again to China from February 15, 2003, to March 2, 2003, and upon their return provided further technology to Huawei.

"[M]uch of the evidence of the secret business relationship between Huawei, Defendant Shaowei Pan, Lemko and the other defendants was destroyed when Defendant Shaowei Pan ran file destruction software on his home computers after [he] and Lemko were ordered by the Court to turn over Pan's home computers by 5 p.m. on May 28, 2009, and just before the computers were actually turned over," according to the lawsuit. "However, there is at least part of an email chain that has been recovered that confirms that Defendant Shaowei Pan, at Huawei's request, transmitted proprietary and confidential Motorola specifications for the Motorola SC300 base station to Ren Zhengfei and JinLong Hou, Huawei's vice president of wireless communications, in March 2003 and that a meeting and an agreement for the transfer of Motorola proprietary information did in fact take place in Beijing during the China trip in February - March 2003."

When Pan returned home on March 3, he sent an e-mail to the two Huawei executives, the title of which was "Attached please find those document about SC300 (CDMA 2000 1X) specifications you asked." Huawei's JinLong Hou acknowledged receipt of the specifications which were marked " 'Motorola Confidential Proprietary' on the front page of the specification and every page of the specification," says Motorola in its suit.

Huawei used various technologies stolen by the Motorola employees to develop and sell complete cellular phone systems. "Defendants Lemko and Huawei have been testing, demonstrating and selling these misappropriated technologies in the United States and all over the world," says Motorola.

Motorola spent hundreds of million of dollars developing proprietary trade secrets and confidential information that are the company's "lifeblood as a technology leader whose market positions depends upon its innovations," it states in its suit. It requires its engineers to sign agreements not to steal its technologies. But that didn't matter to the defendants, Motorola claims.

One defendant, Hanjuan Jin, a software engineer who was hired in 1998 and worked at the company until Feb. 2007, "is a naturalized U.S. citizen and a citizen of the People's Republic of China by birth," says the 91-page suit. "Motorola reposed a high level of trust and confidence in Defendant Jin's trustworthiness integrity and fidelity to her obligations towards Motorola."

As with the other defendants, Motorola says Jin was hired by Lemko, a privately held company based in Schaumburg, Ill., with offices in China and India, in June 2004, without Motorola's knowledge. "Jin continued her employment with Motorola until February of 2007, but never disclosed her simultaneous employment with Defendant Lemko, in violation of the Motorola 'Code of Business Conduct,' " says the lawsuit.

On March 24, 2005, Jin "intentionally, knowing and with intent to defraud, accessed Motorola's protected computers and obtained and transferred by e-mail, in furtherance of that fraud valuable Motorola proprietary trade secrets and confidential information, including Motorola source code, from Motorola's protected computers, to her non-secure personal e-mail account without authorization or exceeding her authorized access, without Motorola's knowledge or consent." Not long thereafter, she took a partial leave of absence, during which time she continued to access Motorola's protected computers and its proprietary trade secrets. She downloaded documents related to Motorola's System Architecture Design, "Push-to-Talk" technology, iDen technology and WiMax technology, among others.

"In February of 2007, while still on medical leave from Motorola, Defendant Jin traveled to China, returning on February 15, 2007," says the suit. While there, she again accessed Motorola's protected computer networks. Shortly after her return on February 23, 2007, Jin said she was quitting her job with Motorola. The next day, "Jin purchased a one-way ticket to Beijing, China, for a flight scheduled to depart on February 28, 2007."

But while attempting to board the flight to Beijing at Chicago's O'Hare International Airport, "Defendant Jin was thwarted by U.S. Customs officials who seized more than 1,000 electronic and paper documents identified as the property of Motorola, including valuable, proprietary information and trade secrets, in Jin's possession, including a laptop computer, external hard drives and a thumb drive." She also had in her possession $30,000 in cash.

The internal Motorola documents included detailed schematics, architecture and network support information and detailed descriptions of numerous Motorola technologies.

In its lawsuit, Motorola describes similar behavior by its other former employees associated with the front company Lemko and Huawei.

Motorola is being represented by Nixon Peabody. Lemko and most of the former Motorola employees who are defendants are being represented by Greenberg Traurig. Huawei is being represented by Leydig Voit & Mayer, and Covington & Burling. The case number is 1:08-cv-05427 in the U.S. District Court for the Northern District of Illinois, Judge Matthew Kennelly.


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