T-Mobile sues Huawei, alleging corporate spying over cellphone-testing robot 'Tappy'

T-Mobile US (NYSE:TMUS) sued Huawei for corporate espionage, alleging that the vendor's employees illegally photographed and tried to steal parts of a robot it developed in its labs, called "Tappy," to test cell phones.

The lawsuit, filed last week in federal court in Seattle, claims that two Huawei employees gained illicit access to its lab in Bellevue, Wash., photographed the robotic arm, tried to smuggle parts of it out of the lab, and then tried to sneak back in after they were banned from the facility.

Huawei, which no longer provides phones for T-Mobile, used the information to design a similar testing robot, and now is "using T-Mobile's stolen robot technology to test non-T-Mobile handsets and improve return rates for handsets developed and sold to other carriers," according to the suit.

According to the Seattle Times, T-Mobile claims that in 2007 it was the first carrier to design a robot to test handsets "by performing touches on the phone the same way a human being would--only much more frequently in a shorter period of time." That led T-Mobile to cut costs, get more reliable testing data and thus get more reliable handsets.

In 2012 and 2013, the suit claims, Huawei employees engaged in the subterfuge. At one point, the suit alleges, a Huawei engineer put one of the robot's simulated fingertips into his laptop bag. Huawei "ultimately admitted that its employees misappropriated parts and information about T-Mobile's robot," the suit says.

T-Mobile did not say how much it is seeking in damages, but, according to the Seattle Times, the carrier claims that because of Huawei's actions it had to spend "at least tens of millions of dollars" switching to other devices. T-Mobile also claims Huawei profited from using the robot testing technology to improve its own phones, "gains that are estimated to benefit Huawei by hundreds of millions of dollars."

"Due to Huawei's material breaches of its contracts with T-Mobile, and its unlawful theft of trade secrets, T-Mobile was forced to stop its ongoing handset supply relationship with Huawei at substantial cost," T-Mobile said.

Huawei acknowledged some of T-Mobile's allegations but said that the company regrets that T-Mobile filed a lawsuit.

"There is some truth to the complaint in terms of two Huawei employees acting inappropriately in their zeal to better understand a customer's quality testing requirements," William Plummer, Huawei's vice president of external affairs, said in a statement. "As a result, those employees were terminated for violating Huawei's Business Conduct Guidelines. As for the rest of the complaint, Huawei respects T-Mobile's right to file suit and we will cooperate fully with any investigation and court proceeding to protect our rights and interests."

A 2012 U.S. government report labeled Huawei and ZTE as security threats that could be used as backdoors for Chinese espionage. Both companies have repeatedly said the claims are without merit. That has effectively barred Huawei form getting contracts with Tier 1 U.S. carriers for network gear. However, Huawei has long enjoyed relationships with U.S. carriers by selling handsets to them.

For more:
- see this Seattle Times article
- see this NYT article
- see this Re/code article

Related Articles:
Huawei has no plans to build a Tizen phone and won't release new Windows Phones
IDC: Huawei, Lenovo grew Q2 smartphone market share at Samsung and Apple's expense
Huawei sees 62% bump in first-half smartphone sales, commits to 80M shipments in 2014
Huawei's first-half revenue jumps 19% thanks to LTE, smartphones
Huawei, ZTE launch branded smartphones in U.S. to raise their profiles
Despite shifting focus away from U.S., Huawei still scores with Tier 2, Tier 3 carriers

Suggested Articles

Ericsson now has commercial 5G RAN contracts with South Korea’s three major mobile operators.

The Wall Street Journal reports that AT&T has hired bankers at Centerview Partners and Goldman Sachs Group in the talks with Elliott.

MWC Los Angeles 2019 kicks off in just a few days, with vertical industries being drawn into the mobile conversation.