Using acquisitions and partnerships to enter the U.S. market is a good choice for Ren, which has also made American companies, which dominate the global Internet equipment industry, ushered in an aggressive Chinese challenger.
Chambers found little "crackdown on Huawei," a company from China that was snatching customers right under its nose. Huawei's products compete directly with Cisco and are about 30% lower. With the U.S. stronghold threatened, Cisco finally couldn't sit still.
First, the first confrontation
In mid-December 2002, the Vice President of Cisco came from the United States to Shenzhen, China, and met with Huawei executives at the Shangri-La Hotel in Shenzhen to formally raise the issue of Huawei's infringement of Cisco's intellectual property rights.
Now inexplicably involved in a lawsuit with Cisco, Ren Zhengfei is depressed and more depressed. He even said that from 2002 to 2003, Huawei was on the verge of collapse at home and abroad. In the initial negotiations with Cisco executives on IP intellectual property issues, his attitude was cold, responding that Huawei has always respected the intellectual property rights of others and paid attention to protecting its own intellectual property rights, but also said that "Huawei is willing to resolve the disputes between the two sides based on the facts." The negotiation condition proposed by Cisco is that Huawei will withdraw the product from the market within 10 days, delete any code in the product that the verifier determines has infringed Cisco's intellectual property rights, and notify the customer to stop using the infringing product within 30 days.
Ren Zhengfei did not immediately express his position. After two more telephone calls, Huawei tried to make some workarounds to the terms proposed by Cisco, but Cisco did not allow any changes to the terms and asked Ren to sign them immediately. This actually leaves no room for negotiation, how can Ren accept it?
II. Cisco sued
Cisco did not get the results it wanted, so on January 23, 2003, the 21st day of the lunar month, just nine days before the traditional Chinese Spring Festival, a lawsuit was filed in the federal court for the Eastern District of Texas, accusing Huawei and its US subsidiary FutureWei of misappropriating part of Cisco's IOS (Internet Operating System) source code for use in the operating systems of its Quidway routers and switches, and infringing at least five Cisco's patents. In the 77-page indictment, Huawei was charged with 21 charges in eight categories, including patents, copyrights, unfair competition, and trade secrets, covering almost all areas of intellectual property litigation.
3. Huawei responds to the lawsuit
Ren Zhengfei knew that although Cisco's accusations were a means to prevent Huawei from taking root in the United States, it was no longer possible to take corresponding measures. This is the first time Huawei has encountered transnational intellectual property litigation in its 17 years since its founding, and it was "sudden", and Ren Zhengfei had no bottom in his heart. He brought Guo Ping and Xu Wenwei, executive vice presidents, and said to them: "The Yankees are looking for trouble for nothing, and they can only work hard for you to go to the United States, I am afraid that you will spend a Spring Festival in the United States." "
Guo Ping and Xu Wenwei put down their work and rushed to the United States as soon as possible, and their Chinese New Year's Eve meals were also eaten in American hotels.
Guo Ping is the chief legal officer (director) of Huawei's legal department, responsible for Huawei's overall planning in legal, media, and academic cooperation, and is also the overall commander of Huawei's response to Cisco litigation. In the United States, he has to prepare for two things: one is to deal with the lawsuit, and the other is to fight for settlement negotiations with Cisco.
Chen Shushi, the chief lawyer in charge of international affairs in Huawei's legal department, an employee in charge of Huawei's international market promotion, and another Huawei lawyer also rushed to the United States. Guo Ping divided these people into two groups, one for the litigation action team and the other for the settlement negotiation team. The two groups worked separately, cooperating with all parties in the United States during the day to extensively establish a "united front", and communicating and reporting with the senior management of the Shenzhen company at night, with the goal: to live up to the mission.
Under the special introduction of an American lawyer, Guo Ping visited Chambers very sincerely to try for peace talks, but he was unable to achieve his wishes.
Cisco was premeditated, and the situation is quite grim for Huawei. At this time, news continues to spread in the industry that the minimum goal of Cisco's lawsuit is to drive Huawei's products out of the US market and prevent the ongoing joint venture negotiations between Huawei and 3Com; The overarching goal is to drag Huawei into litigation, obtain infringement damages, and eventually bankrupt the Chinese high-tech company.
Since Cisco had no intention of settlement, Guo Ping focused his efforts on responding to the lawsuit, and he thought that the worst outcome would be to fully agree to Cisco's terms. Therefore, he combined two small groups into one, on the one hand, he contacted the local media in the United States to let Americans understand what kind of company Huawei is. Guo Ping is confident in the company's products, but he needs authorities to tell the Americans. On the other hand, he hired lawyers from two well-known local law firms to deal with the lawsuit and prepare for the worst.
Fourth, deal with hidden dangers
In Shenzhen, Ren Zhengfei is also doing emergency clean-up work, first requiring all employees to tell the truth and understand the intentions of the top, and if there is any problem to hide, the lawsuit will be passive. At the same time, organize a working group to comprehensively clean up the R&D documents, and when the documents are not clear, it is necessary to explain how the software is compiled, avoid the tricky behavior of individual employees, lead to the company's legal responsibility, and organize personnel to modify the controversial points.
5. Friends are out of the horse
In March 2003, Huawei's acquisition of Cognigine, an American enterprise equipment giant and network processor manufacturer, officially began. On March 20, Huawei and 3Com announced the establishment of a joint venture. The reason why Ren Zhengfei announced before the integration was completed obviously had a lot to do with the response to Cisco's lawsuit. 3Com is Cisco's nemesis, and Ren Zhengfei, who is familiar with "Mao Xuan", naturally knows that "the enemy of the enemy is our friend". With established American companies coming out to speak for Huawei, the situation is bound to change.
Five days later, 3Com CEO Bruce Glaflin appeared to testify for Huawei at the Marshall Division of Federal Court in Texas, presenting a report to the court and telling people that he had been to Shenzhen, China, and had done an eight-month two-way certification with Huawei. Judging by his decades-long career, Huawei is a company with its own technology and can be trusted. If Huawei has the fact of infringing intellectual property rights, 3Com will not take a huge risk and choose to establish a joint venture with Huawei.
However, his testimony can only show that Huawei has its own technology and development capabilities, but does not mean that Huawei's products are not infringing.
On April 14, 2003, Huawei said it had withdrawn products that might contain Cisco code from the U.S. market.
On June 7, 2003, the Marshall Division of the U.S. Court of Texas issued a preliminary injunction, ruling that Huawei stopped using some of the disputed router software source code, operation interface, and online help files proposed by Cisco, and rejected Cisco's other claims.
On June 11, 2003, 3Com requested a judgment that the joint venture with Huawei did not infringe.
6. Cisco re-sued
Cisco was not satisfied and sued again, claiming that Huawei had made false statements in a 2003 copyright dispute between the two parties, had not removed the infringing product, and had released parts of a document that had previously been sealed. In a publicly available report snippet, Cisco said: "According to the precise comments and character separation form, it not only indicates that Huawei has access to Cisco's code, but also means that these electronic codes are copied and inserted into Huawei's code." "
Cisco's accusation corroborates the relevant statements in the investigation report of the Permanent Special Intelligence Committee of the US House of Representatives. One of the 12 charges against Huawei argues that Huawei disregards the intellectual property rights of U.S. companies and entities.
Huawei once again said it would remove all allegedly infringing products sued by Cisco from the U.S. market. The FBI began a covert investigation into Huawei's military background, believing that Ren Zhengfei was the representative of the Chinese military to Huawei, and that Huawei's products may pose a threat to U.S. national security. However, Cisco refused to allow the FBI to intervene in the investigation of Huawei and asked the court to re-adjudicate.
7. Destroy by razing
On behalf of Huawei, Guo Pingren invited Eddie Sheng, a senior professor at Stanford University and an expert in data communication and the Internet, to present a technical report to the Marshall Branch for them. The report pointed out that Huawei's VRP platform has a total of 2 million lines of source code, while Cisco's IOS uses 20 million lines of source code, and it is inconceivable to copy a piece of software 10 times larger than its own. In addition, only 1.7% of Huawei's VRP platform is related to Cisco's EIGRP (Enhanced Gateway Routing Line Protocol) private protocol, but the private protocol itself belongs to the part of some large companies that do not want to disclose in order to monopolize the market.
As the court upheld and dismissed some of Cisco's claims after two separate hearings, on October 2, 2003, Cisco and Huawei reached a preliminary agreement, agreeing to suspend the lawsuit and suspend the lawsuit for six months while the independent third-party experts invited by both parties reviewed the lawsuit.
Soon, Huawei brought the entire source code of the VRP technology platform involved in the dispute to the United States for testing. After strict certification by a third-party audit panel that did not have any Chinese participate, the result was that Huawei's infringement against Cisco was not found in the more than 2,000 source codes related to the "21 allegations in 8 categories" pointed out by Cisco. In the form of intellectual property litigation, Huawei completed a strict "physical examination" in technology research and development. The results of the inspection show that Huawei is "healthy".
In November 2003, Huawei and 3Com formally established a joint venture, Huawei 3Com (H3C, H3C Communication Technology Co., Ltd., hereinafter referred to as H3C), which greatly strengthened Huawei's capabilities in switch and router core processors, and began the road of joint expansion. Several joint ventures in the United States, under the leadership of "Fierce General" Zheng Shusheng, have done a good job.
Due to Huawei's rapid alliance with 3Com, Cisco's fierce offensive was gradually resolved. An industry insider praised: "This move to destroy the Tai Chi pusher is the stroke of the old Ren. "It's a big deal. None of the evidence resubmitted by Cisco could prosecute Huawei in US courts, but made Huawei famous in the world overnight.
8. Reaching a settlement
On April 6, 2004, Cisco adjourned the lawsuit. On the morning of July 28 of the same year, the two parties reached a final settlement agreement, terminating their respective litigation and counterclaims. Accordingly, the court issued an order terminating Cisco's lawsuit against Huawei, and Cisco shall not file any further lawsuits in this case or file lawsuits on the same grounds, and each party's attorney fees, litigation costs, and related other expenses shall be borne by each party.
Ren Zhengfei finally breathed a sigh of relief and flew to the South African branch again in early August of the same year to inspect it. During the inspection, Ren Zhengfei was asked what he thought of Cisco, and he replied: "Cisco is a company worthy of Huawei's respect and learning, Chambers is a great giant, Cisco has made great contributions to mankind in the field of data communication, and Cisco is very successful in management, marketing, and intellectual property." Cisco uses proprietary protocols to gain a competitive advantage, and as an enterprise, it's understandable that it does so. But in order to maintain fair competition, governments should not give it protection, but should force it to open up. "
One day in December 2005, 18 months after the settlement between Huawei and Cisco, in Huawei's headquarters office in Bantian, Shenzhen, Ren straightened his tie in the mirror. The president, who usually doesn't care much about dressing in his "Huawei's hometown", is dressed unconventionally today. Because today he will welcome a rare guest of Huawei, who is both a long-time enemy and a future partner's Chambers.