Chinese rival countersues as Cisco presses IP theft allegations

Cisco Systems furthered its intellectual-property theft lawsuit against Chinese rival Huawei Technologies this week by filing...

Cisco Systems furthered its intellectual-property theft lawsuit against Chinese rival Huawei Technologies this week by filing with the court several declarations supporting its claims, including one from a former Huawei subsidiary employee who said the company tried several times to hire away Cisco employees to duplicate their Cisco projects.

Former human resources manager Chad Reynolds, laid off from Huawei subsidiary FutureWei Technologies  in December 2002, said in a court document that he was asked at least twice to locate and hire Cisco employees who had worked on projects FutureWei hoped to mimic. In one instance, Reynolds said, his overtures led to talks between FutureWei and a Cisco engineer who initially showed interest in the proffered job but withdrew from negotiations after becoming uncomfortable with what he perceived as a request for confidential information.

That engineer, current Cisco employee Jack Flinsbaugh, also filed a declaration supporting Cisco's complaint, detailing his contact with FutureWei.

After initial discussions with FutureWei officials about a position at the firm, FutureWei asked him to travel to China to present a report answering a variety of questions about a project nearly identical to one he had just completed at Cisco, Flinsbaugh said in his testimony.

"I was appalled by the information that FutureWei was asking for," he said. "I have no doubt that this was a direct solicitation of Cisco's confidential and proprietary information."

Ex-FutureWei employee Reynolds also said in his testimony that he believes FutureWei is in possession of Cisco source code, a claim Cisco made in its initial complaint against Huawei and several of Huawei's subsidiaries.

Reynolds said he was told by a Huawei engineer that the company was holding back shipment of new routers until it could fix several bugs common to both Cisco and Huawei products, the presence of which would indicate that Huawei had copied Cisco's work.

Cisco's complaint against Huawei, filed in January with the US District Court for the Eastern District of Texas, is currently pending.

Huawei responded to the charges this week with a lengthy filing denying outright many of Cisco's charges and challenging the company's legal status to bring others, citing grounds such as alleged patent misuse and copyright abandonment by Cisco, as well as fair-use laws.

Huawei also filed several counterclaims against Cisco, charging the company with acts of unfair competition.

"Plaintiffs have engaged in a campaign of misinformation, including the dissemination of patently false and misleading statements regarding defendants' business practices and products. This campaign is consistent with plaintiffs' past and continuing efforts to erect barriers to entry into the router market," Huawei said.  "Moreover, plaintiffs have misused their patents, in an attempt, among other things, to prevent Huawei from lawfully interoperating with plaintiffs' routers and equipment."

Huawei is seeking punitive damages, in an amount to be determined at trial, as well as a declaratory judgment that it has not infringed on Cisco patents.

Both Huawei and Cisco have agreed to an order allowing each to designate as confidential some information likely to emerge during the case, such as business plans and customer lists. Information so labelled will be kept from the public record.


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