China's Huawei Technologies Co Ltd has gone to court to force Motorola to alter the terms of a unit sale to Nokia Siemens Networks to prevent the transfer of proprietary Huawei information to NSN.
NSN is seeking regulatory approval in China for its agreement to buy Motorola's network equipment unit for $1.2 billion. Huawei wants the deal to exclude any equipment based on widely used GSM and UMTS technology standards.
Huawei alleged a possible infringement of intellectual property rights by Motorola in a lawsuit filed on Monday in the U.S. District Court for the Northern District of Illinois Eastern division,
Motorola's GSM business represented about 35 percent of an estimated $3.65 billion 2010 revenue for the networks business, according to Avian Securities analyst Matthew Thornton. He said Motorola, now Motorola Solutions, does not have a material UMTS business.
Huawei's lawsuit names as defendants NSN, Motorola Solutions, which holds the network equipment unit being sold, and Motorola Mobility, which holds the phone and set-top box business and intellectual property assets from the network business. Motorola Mobility was separated from the rest of Motorola on Jan 4.
Representatives for Motorola Solutions and Motorola Mobility declined to comment on the Huawei suit. Officials for NSN also declined to comment.
Avian's Thornton said the deal with Motorola would push NSN well ahead of Huawei in the network equipment market, where the rivals are neck-and-neck.
NSN, a venture of Nokia and Siemens, said in December that completion of the deal -- originally expected by the end of 2010 -- would be delayed until the first quarter of 2011 because it was still working for approval from China's Anti-Monopoly Bureau.
The deal has been cleared in key markets in North America and Japan.
Huawei said that it filed the lawsuit because Motorola, its partner since 2000, did not give it any assurance it would not transfer Huawei information to NSN.
To the contrary, Motorola's proposals to address Huawei's concerns in this regard have confirmed Motorola's intent to disclose and misuse such information, Huawei said in the suit.
Under their partnership, Motorola resold $878 million worth of Huawei products to its customers, and the companies worked together to maintain the equipment, according to Huawei.
Motorola filed suit against Huawei in July alleging theft of trade secrets.
Motorola Solutions shares were up 3.2 percent at $38.35 in afternoon trading on New York Stock Exchange. Motorola Mobility shares were down 26 cents to $34.62.
(Reporting by Sinead Carew and Ritsuko Ando, editing by Gerald
E. McCormick and John Wallace)