Huawei wins round of legal wrangling over Motorola-NSN deal

A federal judge granted Huawei an order that prevents Motorola Solutions (NYSE:MSI) from transferring the Chinese vendor's intellectual property to Nokia Siemens Networks. The court order is the latest twist in a winding legal proceeding among the three companies over NSN's proposed $1.2 billion deal for Motorola's wireless networking unit. 

Huawei sued the two companies in January, arguing that the deal would harm Huawei by passing on its trade secrets to a competitor. Motorola had access to Huawei's intellectual property as a result of the reseller arrangement it signed with Huawei in 2000 in which Motorola resold Huawei's wireless networks products--including radio access network and core network products covering UMTS, GSM and other technologies--using the Motorola name.

The injunction prevents the transfer of intellectual property pending an arbitration of the dispute. It found that Huawei had demonstrated "reasonable likelihood of success" on the merits of its claim. Importantly though, the judge did not block the deal from going forward, which Huawei was seeking. 

Both sides took some measure of comfort from the ruling. A Motorola spokesman, Nick Sweers, told Reuters that the company was pleased with the ruling, and that it will protect Huawei's trade secrets and it hopes to close the deal by the end of the first quarter. Motorola also is seeking approval of the deal from Chinese regulatory authorities.

Huawei, meanwhile, said the ruling showed that Motorola needs to abide by its contractual obligations. "The legal action was carried out only after Motorola was unable to assure us that they would meet their contractual obligations to protect our intellectual property," Huawei spokesman Ross Gan told Reuters. "We have no interest in stopping the transaction between Motorola and our direct competitor."

Interestingly, the Huawei suit came after Motorola sued Huawei in July, shortly after the deal with NSN was announced, alleging that former Motorola employees provided the Chinese equipment vendor with trade secrets about its own technology.

For more:
- see this WSJ article (sub. req.)
- see this Reuters article

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