Key takeaway: Where appropriate, confidentiality agreements should include promises not to reverse engineer the disclosing party’s technology.
Meet “Tappy”, the mobile phone testing robot. Designed by T-Mobile’s Bellevue, Washington, labs in 2006, its mechanical “finger” mimics user inputs for mobile phones. Tappy helps T-Mobile model how users interact with mobile phones, replicating days or weeks of use in a few hours of testing. T-Mobile claims that testing mobile phones before they’re released helps improve their quality, decreasing the number of returns and unhappy T-Mobile customers.
T-Mobile keeps Tappy in a secure testing lab at its offices in Bellevue, Washington. Based on contractual relationships between T-Mobile and Chinese smart phone maker Huawei—requiring Huawei to maintain the secrecy of T-Mobile’s intellectual property and to refrain from attempting to reverse engineer or photograph Tappy—some of Huawei employees had security clearance to access T-Mobile’s labs.
T-Mobile now accuses Huawei of stealing its trade secrets in Tappy’s design and software, according to a complaint T-Mobile filed with a Federal Court in Seattle in early September. Huawei’s allegedly unsuccessful efforts to create its own mobile phone testing robot led it to steal T-Mobile’s robot technology.
T-Mobile alleges that Huawei’s employees engaged in serious misconduct. For instance, T-Mobile claims that two Huawei employees, who had access to the lab, allowed a member of Huawei’s Test Systems R&D team in China to enter the lab, even though he had no permission from T-Mobile to do so. After T-Mobile asked this R&D team member to leave, the two Huawei employees then helped him reenter the lab the next day to photograph Tappy—despite T-Mobile’s ban on lab photography. T-Mobile also alleges that another Huawei employee stole an “end effector” (a key component of Tappy), lied about knowing its whereabouts, and used it in a conference call with Huawei’s R&D team, who were intent on learning more about Tappy’s robot finger and tip. T-Mobile also accuses Huawei employees of stealing Tappy’s operating software.
T-Mobile’s primary claims are theft of trade secrets, breach of contract, and unjust enrichment. Interestingly, T-Mobile also claims that several aspects of the robot are patented or patent-pending. If that’s true, then it may not have trade secret protection in information to the extent it’s published in T-Mobile’s patent applications, because that publicly-available information may no longer be considered a “secret.” On the other hand, it would be surprising for Huawei to have gone to such lengths to obtain information about T-Mobile’s robot if the desired information was already published. In any event, if the allegations in the complaint are true, Huawei may be liable for breaking its promise not to reverse engineer T-Mobile’s robot.
This complaint serves as a caution. Companies should ensure that their confidentiality agreements include prohibitions on reverse engineering, if they plan to disclose technology secrets to partners or vendors.