Cisco sues Chinese company; alleges IOS copying
- By John K. Waters
Cisco Systems is suing a Chinese technology company for allegedly stealing
its software, a move officials say is the first of its kind for Cisco.
The San Jose, Calif.-based network equipment maker filed suit last week in
U.S. District Court in Marshall, Texas, charging that China's Huawei
Technologies unlawfully copied the source code of Cisco's Internet Operating
System (IOS). Cisco also charged that Huawei copied portions of copyrighted
technical manuals and included them in its own user manuals. Cisco is seeking
injunctions to block the manufacture and sale of Huawei equipment, as well as
Cisco is suing Huawei Technologies and its subsidiaries, Huawei America Inc.
and FutureWei Technologies Inc. Cisco filed the lawsuit in Texas because Huawei
America is based in Plano.
Cisco is the network-computing industry's leading router maker, commanding
roughly 70% of the market. Cisco routers are widely used on the Internet and in
corporate intranets, and the IOS is the primary control program used in most of
The IOS is considered to be an extremely powerful and complex operating
system, with an equally complex configuration language. Cisco is charging that
Huawei included the IOS code in the operating system for its Quidway routers and
switches. Huawei's operating system contains a number of text strings, file
names and even bugs that are identical to those found in the IOS source code,
Huawei is China's largest telecom equipment maker and Cisco's best-known
competitor in Asia. Founded in 1988, the company expanded into
computer-networking gear in recent years. Huawei is challenging Cisco's
dominance in the East by offering similar internetworking equipment at much
lower prices. The company's customer list includes China Telecom, China Mobile,
China Unicom, China Netcom Thai AIS, South Korea Telecom, SingTel, Hutchison
Global Crossing, PCCW and Brazil's Telemar, among others. Huawei reported sales
last year of $2.7 billion, down 12% from a year earlier.
Mark Chandler, Cisco's general counsel, said in a statement that the lawsuit
is a first for Cisco. ''Cisco's technological leadership is the result of
significant investment in research and development, and it is Cisco's
responsibility to protect its intellectual property,'' Chandler said. ''Cisco does
not take any legal action lightly. However, Huawei has unlawfully copied Cisco's
intellectual property and refused Cisco's numerous attempts to resolve these
issues. As a result, Cisco has no choice but to protect its technology and the
interests of its shareholders through legal action.''
A source inside the company told eADT that Cisco complained to Huawei about
the alleged misappropriation of its intellectual property last year after
hearing about similarities between the two companies' products from customers.
Cisco had been in talks with its Chinese competitor for months before filing the
lawsuit. After making numerous attempts to resolve the dispute, management felt
it had no choice but to sue, the source said.
Cisco said it has also sent a cease-and-desist letter to Spot Distribution in
the United Kingdom. Spot is distributing the Huawei products that Cisco claims
infringe on its intellectual property rights.
Huawei has denied charges of technology theft in the past, claiming that it
is too busy with its own research and development. The company's Web site
proclaims that 46% of its 22,000 employees are engaged in R&D. Numerous
calls to Huawei's Western offices in Santa Clara, Calif., were not returned by
John K. Waters is a freelance writer based in Silicon Valley. He can be reached