T-mobile USA Inc., a U.S. telecom carrier, created a robot in 2006 to mimic a human's use of cell phones. In 2012 T-mobile used this robot to test Huawei's cell phones for launch on its network. As it turned out, Huawei's phones were not doing well at T-mobile's tests. Simultaneously, inspired by T-mobile technology, Huawei was developing its own robot. However, Huawei was running into technical challenges in the development of its robot. To improve performance on T-mobile's tests and speed up the development of the in-house robot, Huawei's management authorized its engineers to steal robot technology from T-mobile.
Since 2006, T-mobile had invested significant effort in building its cell phone testing robot. T-mobile believed that automated testing by the robot reduced cell-phone returns post-launch and, in the process, gave it an edge over the carriers that it competed with [1], [2].
Initially, T-mobile restricted the robot's use to T-mobile employees. However, based on feedback from cell phone vendors, T-mobile eventually allowed a pre-approved list of vendor employees to use the robot. The vendors' use of the robot was subject to several intellectual property protection rules. These rules included prohibitions on taking photographs or videos of the robot and reverse-engineering the robot.
During its engagement with T-mobile, Huawei's management signed an agreement with T-mobile indicating that its employees would adhere to T-mobile's rules [2], [3].
In 2012, Huawei was attempting to establish a market for its products on T-mobile's network. Facing poor results in T-mobile's robot-assisted tests and technical difficulties in its internal testing robot development project, Huawei's management first asked T-mobile for a license to the robot technology. T-mobile viewed robot technology as a competitive advantage. In particular, it did not want to help cell phone vendors produce products that worked as well on competing networks as they did on T-mobile's network. T-mobile declined to license the technology, not just to Huawei, but also to other cell phone vendors [2].
Once Huawei's management realized that T-mobile was not going to license the robot technology, it directed specific employees with access to the T-mobile robot to take photographs, videos, and measurements of various robot parts in an attempt to reverse-engineer the robot. At one point in May 2013, a Huawei employee surreptitiously removed a mechanical arm from the robot to take it out of T-mobile's premises for photography and measurement. At another point, a Huawei employee with access to the robot lab enabled another Huawei employee to gain unauthorized access to the robot. All these actions violated Huawei's agreement with T-mobile that gave Huawei employees access to the robot for testing in exchange with the constrain of "no reverse engineering" [2].
After the removal of the robot arm, T-mobile tightened restrictions on Huawei personnel's access to the robot lab. Further, T-mobile formally complained about the actions of Huawei's employees to Huawei's management. To save face, Huawei's management portrayed the actions of its employees as the unsanctioned efforts of misguided individuals. Huawei's management eventually claimed that two of the employees involved in the effort to steal T-mobile's intellectual property had violated company policy. The two employees were terminated by Huawei in August 2013 [2].
As T-mobile wisened up to Huawei's actions and complained to Huawei's management, Huawei attempted to cover its tracks. Huawei produced an "investigation report" in which it claimed that two of its employees (the ones who were eventually terminated) had acted on their own and understated that information that the two employees had managed to collect from T-mobile.
Huawei eventually made the two employees available for interviews with T-mobile. However, Huawei coached the engineers to make false and misleading statements to T-mobile to obfuscate the involvement of other Huawei personnel, including those in management roles [2].
In September 2014, T-mobile filed a civil lawsuit against Huawei. Amongst other things, T-mobile alleged a breach of contract by Huawei [4].
T-mobile partially won the case against Huawei in 2019 - a jury awarded it $4.8M U.S. dollars for Huawei's breach of contract [5]. However, T-mobile could not convince the jury of more serious charges that would have required the jury to agree that Huawei's actions were "willful and malicious." Had T-mobile succeeded more fully in its lawsuit, Huawei would have had to pay much higher penalties.
When T-mobile filed its lawsuit in 2014, it likely had no knowledge of the behind-the-scenes maneuvering of Huawei's management to exfiltrate T-mobile's robot technology. The U.S. Government's indictments of Huawei in 2019 [2] and 2020 [3] reveal a much fuller picture of the happenings inside Huawei.
Huawei appears to have a playbook to steal information from other corporate entities. First, Huawei puts pressure on individual employees to steal information from business partners and competitors via its management team. Next, Huawei exfiltrates information for as long as possible - till its access is cut off or there is a lawsuit. In the meantime, Huawei management covered its tracks by making false statements or downplaying theft. Finally, when Huawei's management cannot dodge theft accusations, it pins the blame for the theft on the individual actions of the employees most obviously involved in the espionage effort.
In the case of T-mobile, one of the two employees blamed (and terminated) by Huawei was the one who stole the robot arm and was caught by T-mobile doing so, The other employee was caught by T-mobile in the robot lab without authorization.
In 2013, Huawei extended its playbook by instituting a program to incentivize employees to steal intellectual property [2]. As part of this program, Huawei created an internal web portal for employees to post information from competitors. Huawei instituted a "competition management group" that evaluated the value (to Huawei) of information submitted to the portal. Huawei also had a formal schedule for "bonus" payments to employees based on the value ascribed to the information that they submitted. Finally, Huawei added biannual awards for the regions that contributed the most valuable information.
In effect, Huawei created a pipeline of Huawei employees, willing to act as espionage agents, by offering them money for stolen information.
[1]: A Robot Named "Tappy": Huawei Conspired To Steal T-Mobile's Trade Secrets, Says DOJ. Laurel Wamsley. NPR. January 29, 2019.
[2]: Indictment. Case 2:19-cr-00010-RSM. United States District Court for the Western District of Washington at Seattle. January 16, 2019.
[3]: Superseding Indictment. Case 1:18-cr-00457-AMD. United States Eastern District Court. February 23, 2020.
[4]: T-Mobile sues Huawei, alleging corporate spying over cellphone-testing robot "Tappy." Phil Goldstein. Fierce Wireless. September 8, 2014.
[5]: T-Mobile wins $4.8M ruling against Huawei over alleged theft of smartphone-testing robot "Tappy." Mike Dano. Fierce Wireless. May 22, 2017.
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