Huawei Technologies Co. Ltd has fought back against Cisco Systems Inc.'s effort to bar the company from selling in the U.S. several products allegedly based on stolen trade secrets, with a filing arguing that it has already taken sufficient steps to remove those products from the U.S. market.
Huawei's filing was a response to a recent Cisco memorandum supporting its request for an injunction against the Chinese network equipment maker. In that filing, Cisco seized on Huawei's admission that some source-code copying had occurred, after what Huawei characterized as an employee's unauthorized acceptance of Cisco source code obtained by an outside party.
"Huawei seeks to avoid the issuance of an effective injunction, commensurate with the scope of its unlawful conduct, by dismissing its infringement as isolated deeds of low-level employees which Cisco has now 'voluntarily' remedied. The evidence paints a much different picture," Cisco said in its memorandum.
In addition to copying significant sections of source code used to run Cisco routers, Huawei also illegally incorporated publicly available but copyrighted Cisco material into its products, Cisco charged. Such widespread use of Cisco's technology could not have happened "without the highest level of management knowing about the misappropriation and condoning it," the company said.
Cisco also maintains that Huawei's decision to pull from the U.S. market its Quidway switches and routers, the products that include the disputed operating-system code, is a smokescreen that does not negate the need for an injunction. Huawei's attempts to correct acknowledged infringements have been half-hearted and sloppy, Cisco said, charging that Huawei continues to distribute outside the U.S. code based on illegally obtained material.
Huawei's response filing reiterated its contention that Cisco's primary motivation for the lawsuit is to protect its "substantial profit margins and its dominant market share" in the U.S.
"Cisco's Reply looks backwards, making repeated attacks on products that Huawei has already ceased distributing and that Huawei has neither the incentive nor intention to ever distribute again," Huawei said.
Huawei does not currently posses the allegedly stolen source code and never engaged in the code duplication Cisco claims, the company said.
Huawei defended some acknowledged product similarities by arguing that they exist not as evidence of copying but because of technical steps Huawei took to circumvent anti-competitive measures.
For example, both sides agree that under one version of Huawei's router operating system, its routers identify themselves as Cisco routers.
During testing, Huawei says it discovered that Cisco routers operated differently when they detected Huawei routers, causing performance degradation and inhibiting compatibility. Performance returned to normal, though, if Huawei's router identified itself as one from Cisco -- so Huawei programmed its routers to use a Cisco ID, Huawei said.
Initially filed in January, Cisco's lawsuit against Huawei gained intensity in February when Huawei signed a joint venture with 3Com Corp. for global distribution of networking equipment. The case is currently pending in the United States District Court for the Eastern District of Texas.
"Huawei's focus, along with its joint venture partner 3Com, is on offering customers a compelling choice and products with superior price performance. Cisco's motion seeks to prevent Huawei from selling its products in the U.S. market and is no more than an attempt to stifle competition," Huawei said Thursday in a written statement.