Huawei $2m US patent deal under threat

Executives at Huawei, the Chinese telecommunications equipment maker, believe the Obama administration will force the company to unwind a $2m purchase of patents that was completed in May.

The committee on foreign investment in the US (Cfius), the panel that conducts classified security reviews of foreign takeovers of US assets, is due to deliver its decision on Feb 14. While the company has not yet been told the fate of the deal, executives believe – based on dealings with the US government – that the White House will either force it to be unwound or place such extensive regulations in place that will effectively make use of the technology protected by the patents impossible. Huawei bought the patents from a company called 3Leaf. Before the deal was consummated, the company alerted the Commerce Department about its intentions and requested special export licences to use the patents. Huawei said it was told it would not require special licences, a fact that earlier boosted the company’s confidence that it would win approval of the transaction. Rejection of the deal would have a debilitating impact on Huawei’s expansion ambitions in the US. The company was already forced to abandon a joint takeover of 3Com, the US technology company, in 2008 after Cfius told the company it had extensive national security concerns. Since then, Huawei has pursued an aggressive lobbying campaign to try to convince US lawmakers and officials within the Obama administration that it was transparent and did not pose a threat to national security.