Huawei Misappropriated CNEX Trade Secrets on SSD Controller

CNEX Labs Inc. announced that a federal jury has found that Huawei Technologies Co., Ltd. misappropriated CNEX’s trade secrets.

After 18 days of testimony, argument and deliberation in the U.S. District Court for the Eastern District of Texas, the 8-member jury on Wednesday unanimously found that Huawei misappropriated CNEX’s advanced, emerging and foundational semiconductor technology. The jury rejected all claims Huawei brought against CNEX, including its allegation that CNEX misappropriated Huawei’s trade secrets. Strikingly, the jury found that Huawei had failed to prove that any of its claimed trade secrets were in fact trade secrets.

The jury also rejected Huawei’s claims that Yiren ‘Ronnie’ Huang, CNEX co-founder and CFO, had misappropriated Huawei’s trade secrets or improperly solicited employees. While the jury found that Huang failed to comply with an employment contract provision that he inform Huawei’s Futurewei unit about any patents he filed within 12 months after leaving Futurewei, it ruled that Huawei and Futurewei had failed to prove any resulting harm.

“This is a victory for the rule of law and for global standards of ethical corporate behavior,” said Matthew Gloss, CNEX VP, general counsel and corporate secretary. “This case was never about money, it was about proving Huawei’s wide-ranging scheme to steal our trade secrets and then to weaponize the U.S. Federal Court system against us for purposes of acquiring CNEX’s advanced semiconductor technology outside of CFIUS and U.S. export control restrictions.“

Huawei filed its claim against CNEX and Huang in December 2017, and CNEX and Huang filed counterclaims against Huawei in October 2018.

“While this case has progressed over the past three years, CNEX’s 150-plus employees have been busy building the next great semiconductor company,” said CNEX CEO and co-founder Alan Armstrong. “Our technical and market progress can now accelerate. We are excited to be able to direct our resources to building market share rather than to litigation.”

CNEX’s technology enables a new business model for the SSD market supplying enterprise storage and servers, hyperscale data centers and cloud computing platforms. Its patented, ground-up redesign of traditional SSD controller architecture plus its SSD design capability allow these customers to procure SSDs customized for their own needs, while reducing their exposure to the cyclical swings in SSD supply that have constrained business growth.

CNEX’s SSD controller technologies enable high-volume SSD users to customize their drives to deliver higher throughput, lower power consumption and better QoS (measured as low and predictable latency), while achieving improved cost control.

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June 5, 2019 | In Brief