Huawei's patent deal threatened by U.S. security review

BEIJING, Feb. 15 (Xinhuanet) -- A patent purchase by Chinese telecom company Huawei Technologies from U.S. server technology firm 3Leaf Systems is threaten by the security review by a U.S. government panel, media reports said Tuesday.

Huawei bought patents from 3Leaf for two million U.S. dollars last May. The committee on foreign investment in the U.S. (Cfius), the secretive executive branch panel that vets deals on national security ground, is due to deliver its decision on the purchase Monday.

Huawei said that it was offered an opportunity by the Cfius to withdraw from the regulatory review and sell patents, according to media reports.

The company declined the suggestion and said it would wait out the next step in the process, media reports said.

"We'd like to see a proper conclusion to this process," said Bill Plummer, Huawei's U.S. vice president for external affairs.

The company believed that voluntarily selling the assets would do “significant damage” to its brand and its reputation.

Huawei's unprecedented move will send the decision to U.S. President Barack Obama, who must decide within 15 days whether to block the deal.

But executives of Huawei believe that the White House will either force it to be unwound or place such extensive regulations in place that will effectively make use of the technology protected by the patents impossible, according to the Financial Times.

The world's No. 3 seller of telecom network equipment gave up a bid for 3Com in 2008 due to security concerns. In 2010, a group of U.S. Republican lawmakers raised national security concerns about Huawei's bid to supply mobile telecommunications equipment to Sprint Nextel Corp (S.N).