Huawei Lawsuit: U.S. Department of Commerce Illegally Took Equipment

In the lawsuit, Huawei alleges that the Huawei-made equipment in question was sent to the U.S. for testing and was to be sent back, but was seized by the U.S. government even though no license to export the equipment back to China was needed.

Chinese telecom giant Huawei, the subject of multiple legal fights with the U.S. government that have become emblematic of increasing U.S.-China tensions, Friday filed a lawsuit alleging that the U.S. government took Huawei equipment for examination but did not return it.

In the lawsuit filed Friday in the U.S. District Court for the District of Columbia, a copy of which was examined by CRN, Huawei Technologies USA, Inc., the Plano, Texas-based subsidiary of China-based Huawei Technologies sued the U.S. Department of Commerce, the Bureau of Industry and Security, and the Office of Export Enforcement in relation to Huawei technology that was sent to the U.S. for testing and scheduled to be returned but was kept by the U.S. government.

Neither Huawei nor the U.S. Department of Commerce responded to CRN requests for further information by press time.

Huawei in the suit said that it shipped in 2017 several pieces of telecommunications equipment from China to an unnamed independent testing laboratory in California for certification testing, after which that equipment was slated to be returned to China.

[Related: DOJ Outlines Alleged Fraud, Intellectual Property Theft Charges Against China's Huawei]

The lawsuit is the latest in a spate of lawsuits between Huawei and the U.S. government which has accused Huawei of working at the Chinese government's bidding and illegally exporting products to Iran.

This includes a lawsuit alleging fraud and intellectual property theft that was filed in January, as well as the December arrest in Canada of Wanzhou Meng, Huawei's chief financial officer and daughter of Huawei Founder Ren Zhengfei.

Most recently, the U.S. government is forcing many U.S. technology companies to suspend business with Huawei.

During its time in the U.S., the equipment's characteristics or capabilities were not enhanced, Huawei said.

The equipment included two types of packet transport platforms (Huawei models PTN990 and PTN7900), a computer server (Huawei model RH2288H V3), and an Ethernet switch (Huawei Quidway model S5352), along with such ancillary items as a cabinet, fan assembly, network and power cables, and so on.

At the time of the shipment, the equipment was owned by Huawei Enterprise USA. That company in late 2017 was merged into Huawei Technologies USA.

At the time of that shipment, no license was required for Chinese-made equipment to be shipped from the U.S. to China under the Export Administration Regulations, or EAR, and so the company did not apply for a license. Huawei wrote in the lawsuit because it fell under regulatory categories not controlled for shipment to China and because of license exemptions from foreign-origin items being shipped to the country from where they had been imported.

However, Huawei alleges, the defendants in late September of 2017 offloaded and detained the equipment en route in Anchorage, Alaska.

According to the lawsuit, the defendants after a month delay notified Huawei of the detention and requested technical information to determine whether the shipment would have violated the EAR. Huawei said it promptly provided the information and asked the government agencies to determine whether the seized equipment needed a license to be shipped to China and, if not, to release the equipment.

While the Bureau of Industry and Security says such requests are normally processed in fewer than 45 days, the defendants have yet to respond despite the passing of over 20 months, either to make a determination of whether the license was required or whether the equipment was wrongfully detained.

"As a direct and proximate result, the equipment, to the best of [Huawei Technology] USA’s knowledge, remains in a bureaucratic limbo in an Alaskan warehouse," Huawei wrote in the lawsuit.

Along with the lawsuit, Huawei also attached a copy of a November 1, 2017 letter from the U.S. Department of Commerce Bureau of Industry and Security, a copy of which was reviewed by CRN, which stated that the U.S. government detained the equipment.

"BIS {Bureau of Industry and Security) has reason to believe that the shipment of these commodities to its final destination will result in a violation of the Export Administration Regulations (15 C.F.R. Parts 730-774). You received notification by Special Agent James Fuller of our Dallas Field Office. This letter formally advises you that this shipment is to remain in your custody until further notice. Under no circumstance is this package to be exported or released until you receive further instructions from this office," the letter said.

Huawei alleged it responded to that letter on November 13, 2007, that the equipment was eligible for shipment without a license.

Huawei and the Department of Commerce corresponded several times until late May of 2018, after which Huawei received no more information about the equipment, including whether a license to ship it to China, Huawei alleged.

In its lawsuit, Huawei is alleging that the defendants unlawfully withheld or unreasonably delayed information about whether the shipment needed a license to be exported to China; that the defendants actions were "arbitrary, capricious, an abuse of discretion, or otherwise not in according with law;" that the defendants acted in excess of their authority; that the equipment was subject to "unreasonable seizure;" that Huawei was deprived of property without due process; and more.

Huawei is asking the court to declare the defendants unlawfully withheld or unreasonable delayed agency action, declare the ongoing equipment detention unlawful, immediately determine whether shipment of the equipment required a license, release the equipment if it was found to have not violated the EAR, and pay reasonable attorneys' fees and other "just and proper" relief.

"Defendants have unlawfully withheld and unreasonably delayed agency actions they were required to perform. Regardless of whether Defendants’ initial seizure of the equipment was wrongful—HT USA does not challenge the seizure itself—Defendants’ post-seizure failures to act are unlawful," Huawei wrote.