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July 22, 2010

Motorola confirms that it has amended its lawsuit against Lemko Corp. and no less than 14 other individual defendants to include Huawei Technlologies in Japan, charging the company with actual or threatened misappropriation of various trade secrets and Motorola patent rights.

Originally initiated in February 2008, the lawsuit alleges that Hanjuan Jin and other defendants were employed by Motorola and simultaneously employed by Lemko from 2004 to about 2007.

Then in 2005, Motorola said Jin transferred proprietary information including Motorola source code from Motorola to her personal email account and later to Lemko. Jin, according to the lawsuit, was stopped at O'Hare International Airport on Feb. 28, 2007, with $30,000 in cash and more than 1,000 electronic and paper documents that Motorola alleges were Motorola property, where she was stopped by U.S. Customs officials.

According to the lawsuit, Jin is married to Shawoei Pan, who allegedly met with Huawei officials in either 2001 or 2002 when he was employed by Motorola.

Motorola is alleging that a secret relationship between Lemko and Huawei existed and that both companies have products that are based on Motorola's SC-300 microcell base station transceiver.

Lemko has since filed a countersuit against Motorola.

"Huawei has an agreement with Motorola allowing it to resell only Lemko wireless equipment, but has only recently learned of the amended Motorola lawsuit.

"Based on our review of the complaint so far, the suit is totally groundless and without merit. Huawei has no relationship with Lemko, other than a simple hardware reseller agreement. Huawei will vigorously defend itself against Motorola's baseless allegations. Moreover, as an active and significant player in global standards-setting bodies, Huawei has great respect for the rights of intellectual property holders, and will protect its own hard-earned intellectual property rights with vigor," a company statement said.

In June, Motorola and Research In Motion (RIM) said they have finally settled out of court a two-and-a-half year old patent dispute that had each claiming the other was infringing on the others patents rights.

The settlement was long seen as imminent, but up until today, both parties still had arguments about a few remaining issues.

The origins of the dispute itself began when a 2003 agreement between the two companies expired in November 2007.

Failed talks between the two mobile device makers led to the filing and counter-filing of legal claims in early 2008, and had been dragging on ever since.

Originally, Motorola was seeking a ruling that it didn't infringe on no less than five RIM patents, including two that were related to the Moto Q device, and also charged that RIM’s Curve and Pearl devices, among others, violated seven Motorola patents, including software that links devices and corporate servers.

For its part, Research In Motion claimed that Motorola infringed on nine patents and was demanding exorbitant royalties for its patents.

In resolving this patent dispute, both Motorola and RIM said they have come to a “long-term, intellectual property cross-licensing arrangement involving the parties receiving cross-licenses of various patent rights, including patent rights relating to certain industry standards and certain technologies, such as 2G, 3G, 4G, 802.11 and wireless email technology.”

Last month, Motorola said that its Enterprise Mobility Solutions division was steadily growing and now the company is predicting a compounded annual growth rate of between 5 to 8 percent over the next few years, with opportunities to sell equipment and services into public-safety and vertical market enterprises.

As Motorola prepares to separate its wireless handset business and networks division into two separate companies in 2011, Cowen wireless equipment analyst Matt Hoffman said the research firm thinks the EMS business will be Motorola's largest unit in 2010.

Gene Delaney, president of Motorola's EMS division says “overall, investors often focus on the handset business with Motorola when they look at the stock. But with the changing fortunes in mobile devices business, our EMS division has become the central engine of Motorola, something we think investors will pay greater attention to as the company's two divisions split comes up in the first part of 2011.”

While last year was a down one for the EMS side of Motorola's sales, the unit still posted an operating income of $1 billion on revenues of $9 billion, even as sales dropped over 12.9 percent.

For the first quarter of 2010, Motorola reported a sales increase of 6 percent year over year to $1.7 billion and $271 million of operating income, up 25 percent compared to the year-ago period.

Speaking at Cowen.'s 38th Annual Technology and Telecom Conference, Delaney noted that Motorola's entrenchment in the public-safety sector is likely to earn it future business because the government sales cycle is long and Motorola equipment is deeply embedded into existing equipment.

He added “overall, backward compatibility is a much more important topic than it really sounds.”

“Technology continues to evolve all the time. Our products and our solutions become part of the way that our customers do their jobs, so as new technologies emerge in the marketplace you have to bring this legacy with you,” added Delaney.

Additionally, Motorola sees many opportunities ahead for its services business as well. The company has a NOC (Network Operation Center) at its Schaumberg, Illinois headquarters so it already monitors networks for public-safety agencies and enterprise users.

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Source: Motorola.