Huawei says it has been selectively targeted for punishment using legislation in its suit against the U.S. government; two new Huawei Mate 30 smartphones.
Huawei Argues Ban on Doing Business with U.S. Government is Unconstitutional
| le 20 September 2019
Judge Amos L. Mazzant III in the Eastern District of Texas will await briefs from both parties before issuing a ruling
SHERMAN, Texas—Attorneys for China’s Huawei Technologies Co. argued in court Thursday that a law barring it from doing business with U.S. government agencies is unconstitutional for selectively targeting the company for punishment using legislation.
The telecommunications giant filed a lawsuit in March against the U.S. government, seeking to block implantation of certain portions of the National Defense Authorization Act of 2019.
Huawei has said it amounts to a so-called bill of attainder—an unconstitutional action that finds a person or entity guilty of a crime via an act of legislation.
“This law treats Huawei as an agent of the Chinese government,” said Glen Nager, lead counsel for Huawei and a partner at Jones Day. “It censures Huawei on that basis.”
U.S. attorneys asked for dismissal of the case, heard in the U.S. District Court in the Eastern District of Texas. Attorney Emily Newton with the U.S. Department of Justice argued that Congress had ample national security reasons for the legislation.
U.S. officials have long held that equipment made by Huawei, the world’s largest maker of cellular equipment and the No. 2 smartphone vendor, behind Samsung Electronics Co. , could be tapped by Beijing and is a national security threat.
Ms. Newton said that Huawei is under Chinese law and connected to the country, including receiving tax incentives and research funding, providing an opportunity for “exploitation.”
The U.S. has already sought to implement portions of the provisions targeting Huawei.
The case is being heard in a courtroom in a quiet town north of Dallas, not far from Huawei’s U.S. headquarters in Plano, Texas. Judge Amos L. Mazzant III will await briefs from both parties over the next few weeks before issuing a ruling. He noted the magnitude of the case at the small courthouse, saying it’s “not an issue that this court sees very often, if ever.”
The sweeping defense policy act, signed into law by President Donald Trump last year, contains several provisions targeting Huawei, including one that seeks to ban federal agencies from buying equipment made by Huawei and other Chinese tech companies. Another provision would ban federal contractors from making significant use of such equipment.
Ms. Newton played down the impact on Huawei, saying it can continue to operate in the U.S. as long as federal funds aren’t used. But Judge Mazzant said so much business is touched by federal contracts and grants, and a majority of what the company sells is affected.
“We’re talking billions and billions that flow from the federal government that could be impacted here,” the judge said.
Huawei has repeatedly denied it would ever spy for any government, and says it is the target of a concerted U.S. campaign. Its equipment is effectively blocked from the U.S. market, though it is used around the world.
Judge Mazzant noted that Congress can protect the U.S. from threats, but questioned whether the statute is essentially taking the company out of the market and wondered if there were other alternatives.
“Customers are fleeing from the room, in a sense, because of this,” the judge said.
Mr. Nager said Huawei has been “severely wounded” by the law. “We’ve now had to lay off half of the employees at Huawei USA since this law has gone into effect,” he said.
The NDAA is one of several recent actions by the U.S. targeting Huawei. In May, the Commerce Department added Huawei to its “entity list,” restricting its ability to buy U.S. components and software. The White House the same month issued an executive order banning U.S. companies from using telecom equipment made by firms beholden to ”foreign adversaries,” widely seen as targeting Huawei and other Chinese companies.