Motorola and Huawei settle trade secret dispute

By: | at 08:00 PM | International Trade  

Motorola Solutions Inc and China’s Huawei Technologies Co. have settled a legal dispute over trade secrets, clearing the way for Motorola to complete the sale of one of its business units to Nokia Siemens Networks.

The settlement puts to rest charges by Huawei that Motorola, one of its long-standing partners, could disclose a variety of its trade secrets in selling a networks business to rival Nokia Siemens Networks.

Motorola agreed to pay an unspecified transfer fee to Huawei as part of the settlement, it said.

At the same time, Motorola lowered the sale price of the networks business to NokiaSiemens, a venture of Finland’s Nokia Oyj and Germany’s Siemens AG , from $1.2 billion to $975 million. That should help ensure the deal goes through by April 29, Motorola said in a filing with regulators.

The deal between Motorola and NokiaSiemens was thrown into doubt in January when Huawei filed its lawsuit, demanding that the transaction be altered to avoid infringing on intellectual property rights. At the time, Huawei said that it filed the lawsuit because Motorola, its partner since 2000, did not give it any assurance that it would not transfer Huawei information to NokiaSiemens.

Huawei had charged that due to their relationship, Motorola has information including plans for future products and technical specifications related to product performance and testing.

Motorola itself filed suit against Huawei in July alleging theft of trade secrets via former Motorola employees who gave information to Huawei’s founder.

NokiaSiemens, or NSN, had grown impatient to close the deal, originally due to occur by the end of last year. For NokiaSiemens, the delayed Motorola deal was intended to strengthen it against Chinese rivals and make it the second-largest mobile telecom gear maker ahead of Huawei.

The delay, according to analysts, may also have been holding up plans by the parent companies of NokiaSiemens to sell a minority stake in the venture. Nokia and Siemens said last August they had been approached by private equity firms interested in buying a stake.

“This is a good thing for Nokia as they have been able to cut a new deal, which will be closed in the second quarter,” said Swedbank analyst Jari Honko. “This means they can proceed with selling of minority stake in NSN.”

The settlement could also improve relations in the United States for Huawei, one of the world’s largest makers of telecommunications equipment. The company has said its ability to do business in the United States has been hurt by a series of unproven allegations and misperceptions. Legal disputes proved another headache, particularly with a long-term partner such as Motorola.

In February, the company challenged the United States to launch a formal investigation into its business, in an attempt to clear its name.

The highly unusual call follows the outcome of a recent U.S. government foreign investment review that is forcing Huawei to sell assets it bought from 3Leaf, a small U.S. company. Three years ago, Huawei had to pull back from a bigger proposed investment in 3Com, in similar circumstances.

The company said it has been the victim of misperceptions about its relationship with the Chinese military because its founder, Ren Zhengfei, served in the People’s Liberation Army until 1983. (Reuters)


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