China's Huawei Technologies Co. Ltd. has sued Motorola to delay the sale of the latter's wireless infrastructure business to Nokia Siemens Networks.
The lawsuit alleges that such a sale would possibly result in illegal transfer of Huawei's intellectual property.
The telecom services provider said it is seeking through the lawsuit that the $1.2 billion deal be modified to avoid infringing on its intellectual property rights.
Huawei's lawsuit names as defendants Motorola's two successor companies Motorola Solutions Inc. (MSI), and Motorola Mobility Inc (MMI) as well as Nokia Siemens Networks US LLC and Nokia Siemens Networks B.V.
In the suit filed in a federal court in Chicago, Huawei is seeking a preliminary injunction relief to hold up the sale until an arbitral tribunal is able to adjudicate the matter.
Motorola's failure to adopt measures sufficient to ensure that Huawei's proprietary information remains confidential has compelled Huawei to file for appropriate legal protection of its rights.
For over a decade, Huawei has been providing its confidential wireless and core network communications technologies to Motorola pursuant to a series of agreements. Under those agreements, Motorola has purchased Huawei’s products for UMTS, GSM and other technologies and sold them under its own brand.
The technology involves GSM-standard and CDMA-standard mobile telephony switching equipment, as well as more advanced UMTS (Universal Mobile Telecommunications Systems) networks, that Motorola sold in markets including China, Russia, Belarus, Uzbekistan and Ukraine.
All the agreements entered by Huawei and Motorola have provisions prohibiting Motorola from disclosing Huawei's confidential information to third parties and protecting the confidentiality of Huawei's information.
Huawei said the agreements require that disputes between Huawei and Motorola be settled through arbitration at a tribunal of the International Chamber of Commerce in Geneva, Switzerland. Motorola’s purchases from Huawei have totaled about $878 million from 2000 through the present.
Huawei has had a 10 year agreement with Motorola but we have no agreement that allows them to deliver our intellectual property to any third party, Huawei's vice president of external affairs Bill Plummer told Wall Street Journal.
Since the July 2010 announcement by Nokia Siemens Networks regarding its purchase of Motorola's wireless network business, Huawei has tried to ensure that Motorola does not transfer this confidential information to Nokia Siemens Networks.
However, Motorola has not responded with assurances that it will prevent disclosure of Huawei's information to Nokia Siemens Networks. If Huawei's proprietary commercial property and information is transferred to a third party, Huawei will suffer irreparable commercial damage, the company said.
Motorola Solutions said the case is without merit and it still aims to close the Nokia Siemens deal early this year. Before the deal can go ahead, it needs approval from China's antitrust authorities. Motorola said it is still working with those regulators, according to Reuters.
Nokia Siemens Networks, a venture of Finland's Nokia (NOK) and Germany's Siemens AG, said on Dec. 28 that completion of the deal, originally expected by the end of 2010, would be delayed until the first quarter of 2011 as the transaction has not yet received regulatory approval from the Anti-Monopoly Bureau of China's Ministry of Commerce. Huawei was among the companies that explored buying the business.
When the transaction closes, about 7,500 employees are expected to transfer to Nokia Siemens Networks from Motorola’s public carrier wireless network infrastructure business, including large research and development sites in the United States, China and India. The transaction already received antitrust clearance from United States, European Union, Brazil, Japan, Russia, South Africa, Taiwan and Turkey.