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Huawei sues US over equipment ban in escalating legal clash

Huawei Canada. (Raysonho/Wikimedia Commons)
March 07, 2019

Huawei Technologies Co. sued the U.S. government for barring its equipment from certain networks, delivering a legal riposte to American accusations it aids China in espionage.

The lawsuit is aimed at a U.S. statute that blocks government agencies from using equipment from Huawei and its domestic rival ZTE Corp., according to a complaint filed in federal court in Texas. Huawei argues in the suit that it’s unconstitutional to single out a person or a group for penalty without a fair trial.

The action signals a more aggressive response from the company toward its U.S. accusers, who have been trying to persuade other countries to ban Huawei gear from crucial fifth-generation communications networks. The complaint landed days after finance chief Meng Wanzhou sued Canada’s government for allegedly trampling her constitutional rights during her December arrest — an effort to discredit the case against her as she awaits potential extradition to the U.S. for bank fraud.

In its U.S. case, Huawei is taking aim at a provision in the 2019 National Defense Authorization Act. That provision bars any executive agency, government contractor or company that receives a government loan or grant from using Huawei and ZTE equipment, according to the complaint. The Chinese company argues that the provision is a bill of attainder, a legislative punishment without trial that’s prohibited by the U.S. Constitution.

“That’s a very hard argument to win but certainly something that they can try in an effort to slow down the federal government,” Peter Henning, a professor at Wayne State University Law School, told Bloomberg on a podcast.

Huawei is increasingly in the crosshairs of the U.S. government and its allies, just as it’s pushing for leadership in supplying fifth-generation wireless technology. Countries are preparing to spend billions on the potentially revolutionary equipment aimed at enabling everything from smart highways to self-driving cars. The world’s top provider of networking gear faces the prospect of being shut out of pivotal infrastructure markets. And the clash has complicated negotiations between Washington and Beijing as they try to hammer out a trade deal.

Huawei also repeated its argument that a blockade on its gear simply disadvantages Americans.

“Consumers in the United States (particularly in rural and poor areas) will be deprived of access to the most advanced technologies, and will face higher prices and a significantly less competitive market,” the company said in the complaint.

U.S. officials and industry executives have long harbored questions about Huawei’s ties to China’s government, and concerns about its technology have mounted in lockstep with its growing success. Federal authorities in Seattle are investigating the company for allegedly stealing trade secrets from U.S. partner T-Mobile US Inc., and in December Meng was arrested in Canada on fraud charges linked to Iran trade-sanction violations.

“This is one part of a much broader effort here to confront China over trade secrets theft and how the Chinese government is subsidizing companies and trying to get their products into the United States,” Henning said.


(Laurel Brubaker Calkins contributed to this report.)


© 2019 Bloomberg News

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