Huawei, often considered a proxy for China in their global effort to acquire advanced technologies via any means possible,  has been called out in United States District Court – Eastern District of New York for the theft of intellectual property from a U.S. startup located in California.

Court documents identify the company as “Victim Company”, though media has identified the victim as technology startup CNEX Labs.

The fleecing of CNEX Labs

In this instance, Huawei used a bit of misdirection in order to acquire CNEX Labs technology associated with solid state drives (SSD). They used Chinese national Bo Mao, who since 2015 has been an associate professor at the “Advance Storage Technology Lab” at Xiamen University in China.  He is also connected as post-doc researcher to the University of Texas via a tenured professor identified as Hong Jiang.

The criminal complaint against Mao notes that since 2016, CNEX Labs is the only company to have developed a computer board with an embedded software-development-kit (SDK). That board included an integrated chip containing the “open-channel” controller. This board, according to the FBI, was not available for purchase.

The FBI investigation alleges that since 2016, Huawei, has attempted to get its hands on the technology.

In late-December 2016 Mao, surreptitiously acting on behalf of Huawei and overtly on behalf of his ostensible research at the University of Texas, reached out to CNEX Labs and requested access to the CNEX Labs technology for research purposes.

Unbeknownst to CNEX Labs was the fact that in October 2016 Huawei had pledged $100,000 to the research project, “Enforcing Xth Percentile Latency and Throughput SLOs under Consolidated Datacenter Resources”, a project which was led by Jiang, for which CNEX Labs SSD open-channel technology was a pathway to achieving the “ostensible goal of the research project.” The criminal complaint indicates that Jiang also reached out to CNEX Labs.

CNEX Labs agreed to participate in the University of Texas research program – not knowing they were also signing on to be fleeced by China. They provided Mao a sample of their open-channel sdk board and had Mao sign an agreement which indicated that transference of the technology to third parties was prohibited. In May, the University of Texas, purchased two of the CNEX Labs boards for research purposes, with one of them going to Mao, a Chinese resident.

Huawei’s Aggressiveness tips off company

That didn’t slow Huawei down, and their own eagerness to acquire more copies of the board is what ultimately brought their criminal activity to the forefront. Huawei reached out to a CNEX Labs distributor to acquire the exact board which Mao received. What Huawei and Mao didn’t realize is that Mao’s board was the only board CNEX Labs had availed outside their own ecosystem with product number and distributor identified.

Following the above outreach from Huawei, CNEX Labs confronted Mao via telephone and he swore that he had not provided any information to Huawei. Shortly thereafter they removed his access to technical support (July 2017). In August 2017, Mao ran an end-around and accessed the second board, resident at the University of Texas, remotely via Jiang.

The civil trial between CNEX Labs and Huawei concluded that Huawei had misappropriated the technology of CNEX labs.

Now we wait for the criminal trial of Bo Mao, who is not resident in the United States, but who now has his travel options limited, given the long reach of the U.S. Department of Justice, as evidence by the December 2018 arrest of Huawei’s CFO in Canada.

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Christopher Burgess (@burgessct) is an author and speaker on the topic of security strategy. Christopher, served 30+ years within the Central Intelligence Agency. He lived and worked in South Asia, Southeast Asia, the Middle East, Central Europe, and Latin America. Upon his retirement, the CIA awarded him the Career Distinguished Intelligence Medal, the highest level of career recognition. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century” (Syngress, March 2008).