On Wednesday, May 15th, President Trump declared a national emergency via executive order over threats against American technology. The order authorized Department of Commerce Secretary Wilbur Ross, in consultation with various other agency heads to block transactions involving information or communications technology posing an “unacceptable risk to the national security of the United States.”
The Department of Commerce subsequently added Huawei Technologies Company Ltd. (“Huawei”) and 68 of its non-U.S. affiliates to the Bureau of Industry and Security (“BIS”) Entity List, which restricts U.S. companies from selling or transferring technology to Huawei without a BIS-issued license. The move effectively prevents Huawei from acquiring parts from its U.S. suppliers, and prevents certain telecommunications companies from using Huawei equipment for critical services. While many larger telecommunications companies have moved away from using Huawei technology, some smaller companies still depend on Huawei to provide service in rural areas.
BIS announced on May 20th, however, that it would be issuing a 90-day Temporary General License (“TGL”) to small rural telecommunication companies to make other arrangements to replace Huawei equipment. Specifically, the TGL authorizes activities necessary to the continued operations of existing networks and to support existing mobile services.
These actions taken against Huawei are part of a long series of confrontations between the Trump administration and Huawei. Earlier this year, the Department of Justice (“DOJ”) charged Huawei Device Co. Ltd. and Huawei Device USA Inc., two units of Huawei, with trade secrets conspiracy, wire fraud, and obstruction of justice. The two Huawei units pled not guilty and trial is set for March 2nd, 2020. The trade secret charges date back to 2014, when T-Mobile sued Huawei for stealing designs and parts of the company’s testing robot, “Tappy.” In that case, the jury found that Huawei had misappropriated Tappy, but declined to award the punitive damages that T-Mobile was seeking.