Tappy, T-Mobile, and the Huawei Indictment

March 8, 2019

Huawei Devices USA (Huawei), a Chinese-based smartphone super-corporation, has recently been hit with a 10-count indictment by the Department of Justice. Per the indictment, Huawei instructed its employees in the United States to steal valuable corporate trade secrets and various forms of intellectual property from American competitors. One allegation is that the company offered bonuses to employees who stole confidential information from other companies. The indictment also alleges that, in 2012, Huawei attempted to steal information from “Tappy,” T-Mobile’s phone-testing robot, to build Huawei’s own phone testing robot. Further, the counts allege that Huawei’s engineers violated multiple confidentially and non-disclosure agreements with T-Mobile by “secretly taking photos” of Tappy, “taking measurements of parts of the robot,” and even “stealing a piece of the robot” in an effort to replicate the product.

Although these charges are merely allegations, Huawei’s past conduct has raised concern for large American tech corporations. Over recent years, Huawei’s economic influence in the United States raised suspicion as to whether it was building “back doors” into its equipment through spying or thievery. As a response to these raising concerns, the United States had already banned Huawei from selling networking equipment here. The Department of Justice’s investigation may have shined an appropriate spotlight on these alleged tactics.

It is no secret that the United States and China have begun what many consider a trade war that has shook national markets.

Huawei, of course, has denied all allegations, claiming that the company and its executive agents did not plot or break any American laws. China has added that the Department’s indictment against Huawei is “unfair” and even “immoral.” China’s foreign ministry suspected that the allegations were simply an American ploy to suppress the success of Chinese firms. The minister’s concerns may not be entirely unfounded, given that the United States and China have been “jockeying for leadership in the next generation of cellular technology.” However, FBI Director Christopher Wray has expressed that the “charges . . . clearly allege that Huawei intentionally conspired to steal the intellectual property of an American company” and “continually disregarded the laws of the United States in the hopes of gaining an unfair economic advantage.”

The Department of Justice’s charges against Huawei have sparked debate over whether Huawei genuinely acted in isolation or under the influence of the Chinese government. Senator Mark Warner claimed that ample evidence exists to suggest that no major Chinese company is independent of the Chinese government and Communist Party. Although no concrete evidence directly implicates the Chinese government in Huawei’s alleged conduct, one thing is clear: the charges coupled with the arrest of Huawei’s CFO, Meng Wanzhou, will have lasting effects in both the nation-wide tech industry and general relations between China and the United States. It is no secret that the United States and China have begun what many consider a trade war that has shook national markets. Huawei faces a potential $5 million fine, or three times the value of the stolen trade secret, whichever is greater. On top of that, the company faces a potential $500,000 fine for obstruction of justice and several bans on the ability to sell and provide telecommunications equipment in certain countries. These economic sanctions will not only prevent the tech giant from competing in the national market, but it will affect how the United States, the EU, and China deal with future intellectual property issues.

Carlos Zapata, 18 February 2019