FILE - In this May 29, 2019, file photo, a woman walks by a Huawei retail store in Beijing. A federal jury in Texas rejected Wednesday, June 26, 2019, claims by Chinese telecom-equipment maker Huawei Technologies that Silicon Valley start-up CNEX stole its trade secrets. (AP Photo/Andy Wong, File)

Federal jury rules against Huawei in trade secrets case

June 26, 2019 - 5:23 pm

DALLAS (AP) — A federal jury in Texas has ruled that Huawei stole trade secrets from a Silicon Valley startup, but it didn't award any damages.

After a three-week trial, jurors in U.S. District Court in Sherman, Texas, determined Wednesday that while Huawei had misappropriated technology from the startup, Cnex, Huawei didn't benefit from it.

The jury also rejected Huawei's claims that Cnex co-founder Yiren Huang stole technology while he worked at a Huawei subsidiary, then recruited other former Huawei workers after helping launch Cnex in 2013.

Huawei is embroiled in a trade dispute between China and the U.S., which has accused Chinese companies such as Huawei of committing forced technology transfers and stealing trade secrets.

The Cnex case isn't directly related to that trade dispute, though it's overseen by the same federal judge, Amos Mazzant III, who is assigned to a Huawei lawsuit against the U.S. government. Huawei says that a ban on federal agencies and contractors buying its equipment is unconstitutional.

In a statement, Huawei called the Cnex ruling a "mixed verdict" and said it was considering its next steps.

Cnex, which has financial backing from Microsoft and Dell Technologies, works on solid-state drives, the types of storage common in smartphones and other popular devices. They start faster and are more reliable than traditional hard disks, though they are typically more expensive.

Huawei said Huang started Cnex three days after leaving Huawei's Futurewei unit and began filing patent applications less than a month later based on work he did there. Huawei also accused Huang of poaching its employees and alleged that one was caught downloading thousands of pages of confidential Huawei documents.

The jury found that Huang did violate a contract provision regarding disclosing patent applications, but it awarded no damages after concluding Futurewei didn't prove harm.

Lawyers for Santa Clara, California-based Cnex has countered that Futurewei hired Huang in 2011 as a pretext to steal his ideas. In court documents, Cnex accused Huawei Deputy Chairman Eric Xu of directing an effort to reverse-engineer Cnex technology. Huawei lawyers denied the accusation.

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