Supposed stolen information on replicating “Tappy,” a T-Mobile robot housed in Bellevue and used to test cell phones, has led to a 10-count grand jury indictment against Huawei, a Chinese-based telecoms giant with offices in the Seattle region.
“As I told Chinese officials in August, China must hold its citizens and Chinese companies accountable for complying with the law,” said Acting Attorney General Matthew G. Whitaker, in a news release. “I’d like to thank the many dedicated criminal investigators from several different federal agencies who contributed to this investigation and the Department of Justice attorneys who are moving the prosecution efforts forward. They are helping us uphold the rule of law with integrity.”
The charges, unsealed Monday, Jan. 28, are the latest installment of action taken against the technology company and follow a T-Mobile lawsuit filed in 2014. A jury awarded the phone company $4.8 million in 2017 over stolen trade secrets.
T-Mobile declined to comment for this story. Huawei could not be reached for comment.
According to indictment paperwork, in 2012 Huawei began a concerted effort to steal information on a T-Mobile phone-testing robot “Tappy” in an attempt to construct their own similar device. The robot was used to test cell phones before being shipped out to customers and was housed in T-Mobile’s Bellevue Device Lab. It could simulate numerous weeks of cell phone use in a 72-hour period, according to reports.
Huawei, a phone manufacturer and seller, entered into a supply agreement with T-Mobile in June 2010, to provide them wireless phones, the indictment states. In 2011, Huawei began to supply phones, marketed and sold by T-Mobile. In 2012, T-Mobile gave Huawei engineers access to “Tappy” to test their devices.
However, the company was required to execute two nondisclosure agreements, filled with multiple confidentiality provisions. Huawei employees allegedly violated the agreements by secretly taking photos of “Tappy.” During one instance, on May 29, 2013, the arm of the robot was placed in a laptop bag and removed from the technology laboratory, prosecutors said.
When T-Mobile employees discovered that the robot part was missing, they contacted the Huawei employee, who initially denied the allegations but later said he found it in his bag, the indictment papers allege.
T-Mobile threatened to sue Huawei after the company discovered the criminal activities.
Huawei soon after conducted an internal investigation and “falsely claimed that the theft was the work of rogue actors,” according to the U.S. Department of Justice. Emails obtained in the investigation show that the plan to steal secrets was a company-wide effort — not the work of two Huawei employees acting alone — prosecutors said. In July 2013, Huawei offered financial incentives to employees, depending on the value of information they stole from companies around the world.
Huawei Device Co., Ltd. and Huawei Device Co. USA are now charged with theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud and one count of obstruction of justice.
Conspiracy and attempt to commit trade secret theft is punishable by a fine of up to $5 million or three times the value of the stolen trade secret, whichever is greater. Wire fraud and obstruction of justice are punishable by a fine of up to $500,000.
“This indictment shines a bright light on Huawei’s flagrant abuse of the law — especially its efforts to steal valuable intellectual property from T-Mobile to gain unfair advantage in the global marketplace,” said first assistant U.S. attorney Annette L. Hayes of the Western District of Washington, in a news release. “We look forward to presenting the evidence of Huawei’s crimes in a court of law, and proving our case beyond a reasonable doubt. Fair competition and respect for the rule of law is essential to the functioning of our international economic system.”
