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Texas Hosts Huawei Challenge to US Defense Law With Jones Day, Morgan Lewis Teams


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Chinese tech juggernaut Huawei has turned to two U.S. law firms with ties to the Trump administration, Jones Day and Morgan, Lewis & Bockius, in the federal lawsuit filed in Texas against the government and several Trump cabinet members.

The company named six cabinet secretaries and the General Services Administration as defendants in its 55-page complaint in federal court in Sherman, Texas. The suit challenges the constitutionality of a section of the 2018 law funding the Defense Department and precluding U.S. government agencies from purchasing good and services from Huawei.

The company also retained Siebman Forrest, Burg & Smith as local counsel. The law firm has offices in Sherman and four other Texas cities.

Huawei is seeking a declaratory judgment that Section 889 of the 2019 National Defense Authorization Act deprives the company of its due process rights and runs astray of several other constitutional provisions.

"In short, section 889 blacklists Huawei and bars it from significant sectors of the U.S. telecommunications market, all without giving Huawei a fair hearing at which it could be informed of and confront the allegations made against it," the complaint said.

The language in question does not just bar federal agencies from purchasing Huawei equipment and services, but also forbids them from contracting with or awarding grants or loans to third parties who buy Huawei equipment or services, the lawsuit said.

Section 889, which Huawei says brands it a tool of the Chinese government and a risk to U.S. security, also names the company's smaller Chinese rival, ZTE Corp.

"Section 889 is based on numerous false, unproven, and untested propositions," Huawei chief legal officer Song Liuping said in a statement. "Contrary to the statute's premise, Huawei is not owned, controlled, or influenced by the Chinese government. Moreover, Huawei has an excellent security record and program. No contrary evidence has been offered."

Huawei said the restrictions prevent the company from providing more advanced 5G technologies to U.S. consumers, which will delay the commercial application of the latest generation of cellular mobile communications.

The company is also asserting the rule barring it from the U.S. market will have a disproportionate impact on rural mobile users by ruling out a cost-effective strategy for upgrading networks.

"If this law is set aside, as it should be, Huawei can bring more advanced technologies to the United States and help it build the best 5G networks," Huawei chairman Guo Ping added in a news release. "Huawei is willing to address the U.S. Government's security concerns. Lifting the NDAA ban will give the U.S. Government the flexibility it needs to work with Huawei and solve real security issues."

To fight this legal battle, the company has turned to two law firms who have been closely linked to the Trump administration.

At Jones Day, Huawei has turned to veteran U.S. Supreme Court advocate Glen Nager and his younger appellate partner Ryan Watson, a recent clerk for U.S. Supreme Court Justice Samuel Alito. The first two years of the Trump administration saw a steady pipeline of Jones Day lawyers to the White House counsel's office, Justice Departmen and other government agencies. At least a dozen former Jones Day lawyers who received government jobs during the Trump administration are still working in the federal government.

From Morgan Lewis, Huawei has enlisted Washington partners Andrew Lipman and Russell Blau, two experts in telecommunications law. Their partner in the D.C. office, Sherri Dillon, has long served as President Trump's tax attorney and was recently asked by the U.S. House Committee on Oversight and Reform to appear for a "transcribed interview" related to congressional Democrats' probe into the president's conduct and finances.

A report from the U.K. technology news site Telecoms.com shows Huawei far out earns ZTE and its other rivals in the telecom equipment space. It brought in $92.5 billion in 2017, more than competitors Nokia, Ericsson and ZTE combined, and far more than ZTE's share of $17.4 billion.

In spite of this difference, ZTE far outspent Huawei in U.S. lobbying, turning to Hogan Lovells, Kasowitz Benson Torres and two other lobbying firms to spend a total of $3.79 million in 2018. Huawei, meanwhile, only spent $165,000 over the same interval.

A spokesman for the White House did not respond to a request for comment by deadline.

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