Huawei opens defence in US criminal trial, touting its record of innovation

Huawei Technologies started presenting its case on Wednesday, arguing that as a global tech leader it had no interest in stealing trade secrets, in a high-stakes criminal trial involving dozens of witnesses, legions of lawyers and untold millions of US dollars in legal fees.

The Shenzhen-based company has pleaded not guilty to 14 criminal counts in New York’s Eastern District Court, including racketeering conspiracy, bank fraud, wire fraud and trade secret theft spanning more than two decades. If it loses, the four-decade-old company faces huge financial and regulatory penalties.

The government, which wrapped up its case on Wednesday morning, has alleged that Huawei operated as a criminal enterprise that stole intellectual property – including material related to US telecoms carrier T-Mobile’s “Tappy” smartphone-testing robot – and violated US sanctions against Iran to fuel its global expansion. Over nearly seven weeks, the prosecution called 61 witnesses.

The broad outlines of Huawei’s defence – that its growth and success are a product of its own research and development rather than any illegal acts – were on display on Wednesday as defence lawyer Douglas Axel called his first witness, Yang Chaobin, a senior Huawei executive and board member.

In response to often-tedious questioning, a common feature on all sides in the highly technical trial, Yang detailed several advances the company made over the years in telecoms networks, handsets and helping forge industry standards.

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Huawei goes on trial in the US for racketeering after nearly a decade of litigation

“I was deeply involved in this innovation,” Yang testified about a technology called “SingleRAN” he helped develop in 2008, speaking through an interpreter.

SingleRAN, short for single radio access network, is an architecture that allows mobile network operators to run multiple radio access technologies over a single, unified hardware platform and base station set-up.

“I would like to say this was one of the proudest moments in my Huawei career,” he added.

Complicating Huawei’s undertaking, District Judge Ann Donnelly has allowed the government to introduce admissions made in 2021 by Huawei Chief Financial Officer Meng Wanzhou after she was detained for nearly three years in Vancouver, British Columbia. As a condition of her release, she acknowledged that she made misleading statements in 2013 to an HSBC executive about the links between Huawei and Skycom, an affiliated company operating in Iran.

Axel at one point sought to show the listless jury some of the more relatable gizmos that Huawei has developed, including a foldable laptop and a three-way foldable mobile phone, only to be reined in by the judge.

Pivoting, Axel worked to elicit a slew of metrics meant to showcase the size and global reach of the privately held company, worth some US$200 billion by some estimates and one of China’s national champions.

These included its 210,000 full-time employees worldwide, the billions of US dollars and 110,000 employees devoted to research and development, and its safeguards meant to ensure compliance with proprietary technology globally.

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“It is in Huawei’s every interest to protect intellectual property rights,” said Yang, with eyeglasses, black sports shoes and a receding hairline, “not just in China but among other players”.

To amplify its point, the defence cited the case of Zhu Yibin, a Huawei technical engineer, who was dismissed in 2004 after attending Chicago’s Supercomm trade show. Security guards reportedly caught Zhu taking unauthorised photographs and inspecting equipment after hours at the conference booths of competitor networking companies, including Fujitsu Network Communications.

In sharp cross-examination, Assistant US Attorney Matthew Skurnik questioned whether Yang’s approximate bonus of 10 million yuan (US$1.5 million) and base salary of a “couple hundred thousand” yuan were dependent on his testifying successfully in the trial; asked who at Huawei asked or told him to testify and quizzed him on how informed he could be about every compliance problem involving a company that large.

“I do not think that is fair,” Yang responded. “Huawei has over 210,000 employees.”

Wednesday also saw repeated tussling between the two legal teams leading to several pull asides outside the earshot of jury members to wrangle over objections and relevance. Donnelly, on occasion, expressed concern with Axel’s pacing and approach.

“Rather than ‘what do you remember about it’, we need to focus a bit,” she said.

Beijing has repeatedly criticised the eight-year legal case as an act of state-driven “economic bullying”.

“The Chinese government firmly opposes the US side’s suppression and containment of Chinese enterprises and firmly supports Chinese enterprises in safeguarding their legitimate rights and interests,” the Foreign Ministry said in September at the start of the trial.

Huawei has not released the legal bills it has incurred over the years.

But legal and industry analysts estimate these amount to tens of millions and potentially hundreds of millions of US dollars. Huawei has retained several elite “white-shoe” law firms, including Sidley Austin LLP, where Axel works, Steptoe LLP and Jenner & Block, drawing on dozens of senior partners and defence lawyers, some of whom bill up to US$2,500 per hour.

And those hours add up.

The initial indictment was handed down in late 2018. Since then, Huawei lawyers have dealt with complex discovery proceedings, years of preparation, expert witness fees, special accounting forensics, international extradition proceedings involving Meng leading to the ongoing federal jury trial, which is expected to last well into November, if not longer.