Huawei accused of IP theft and installing a backdoor in public security project

A US cloud software company is suing Chinese vendor Huawei, alleging it stole it intellectual property and installed a backdoor when they collaborated over a project in Pakistan.

The lawsuit, which has been published by The Register, was brought by Business Efficiency Solutions, which describes itself as an ERP software company with a focus on the cloud. It claims in 2015 Huawei was pitching for a project with Lahore law enforcement agencies to modernise their IT, but lacked expertise in some areas, so sought to partner with BES on the project. BES agreed and they won the $150 million gig.

BES then alleges that once Huawei got access to its proprietary technology it set about reverse-engineering it such that it could then buy equivalent technology elsewhere and contest its commercial obligations to BES within the deal. Huawei is also accused of using its knowledge of BES trade secrets to bid for other similar projects by itself.

The juiciest allegation, however, is that Huawei also used the project to steal private data from Pakistan. “Huawei also began to use one of BES’s software systems to establish a ‘backdoor’ from China into Pakistan that allowed Huawei to collect and view data important to Pakistan’s national security and other private, personal data on Pakistani citizens,” alleges the suit.

The Reg also got hold of a brief comment from Huawei. “In September 2018, Huawei Pakistan filed for arbitration in District Courts (West), Islamabad against Business Efficiency Solutions (BES) over ongoing contract disputes,” it said. This arbitration resulted in an interim relief order in Huawei’s favour. The arbitration process is still ongoing. We do not comment on on-going legal cases. Huawei respects the intellectual property of others, and there is no evidence Huawei ever implanted any backdoor in our products.”

Since this case has been underway for three years in Pakistan, you have to wonder why BES has decided to re-litigate in the US. It could be because it’s not happy with how it’s being handled in Pakistan or maybe the US government encouraged it to do so in order to present further evidence of the alleged security threat posed by Huawei. Either way, the outcome of this case could have ramifications far beyond BES’s bottom line.