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Report on Business Huawei promises to keep intellectual property in Canada as it makes PR push amid security review

Huawei’s global chairman Liang Hua, centre, sits with Huawei Canada president Eric Li, second left, and R&D Huawei Canada president Christian Chua, far right, during a media roundtable event in Toronto, on Feb. 21, 2019.

Chris Young/The Canadian Press

Huawei Technologies Co. Ltd. says it has changed the way it works with Canadian universities after the program came under fire for helping taxpayer-funded research and related patents flow out of the country.

Liang Hua, Huawei’s global chairman, touted the new approach to research partnerships at a meeting with reporters in Toronto on Thursday amid a Canadian government cybersecurity review on the use of the Chinese company’s equipment. He also reiterated many points the company has made over the past two months to counteract a U.S. campaign to encourage other countries to block the Chinese telecom company from 5G, or fifth-generation, wireless networks as the two countries vie for dominance in the sector.

Huawei said Thursday in a statement it is changing its practices “to ensure all intellectual property (IP) generated in collaboration with Canadian institutions remains in the country.” Mr. Liang and other Huawei executives were vague on details, saying that at some point in 2018, they adopted a “comprehensive” approach of “co-ownership” of patents with universities in Canada.

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Last May, The Globe and Mail reported on the vast network of research connections Huawei had established after committing about $50-million to 13 leading Canadian universities and obtaining millions of dollars in government grants. At the time, The Globe reported that 40 U.S. patent filings showed that Canadian scholars had assigned all intellectual property rights to Huawei.

Since that report, the U.S. Patent and Trademark Office database shows just one patent was assigned from a Canadian university to Huawei.

Mr. Liang, speaking through a translator on Thursday, said the new commitment to share patent ownership with Canadian universities “has nothing to do with 5G projects in Canada,” and that the company’s wish to participate in next-generation network building here is a separate “discussion.”

He also insisted the company would not spy on behalf of the Chinese government and said he is committed to addressing security concerns. He pledged to continue investing in Canada and support existing customers here even if the federal government bans the company’s technology from 5G networks. His visit comes as the company, which has historically avoided media attention, has held similar events with journalists around the world to promote its technology and security commitments.

J.P. Heale, managing director of the University of British Columbia’s industry liaison office, said his school had in the past two years drawn up new research funding agreements with Huawei that would see the school and company share joint ownership of patented research sponsored by the telco giant. Under a previous funding arrangement, the school transferred full ownership of patented research to the company.

He added that reflects an overall shift in the school’s approach to industry-sponsored research on campus, related to “emerging sensitivities and pressures … on UBC over perceptions and people at large not being in favour of assignment of IP.” He said the shift was “not specific” to Huawei, but acknowledged the company “was a factor. … It’s hard not to notice the media attention and scrutiny on the topic."

University of Waterloo spokesman Nick Manning said under the school’s “creator-owned” policy, researchers maintain ownership over their intellectual property “unless they contractually assign those rights to another party.” He added such deals “are negotiated on a case-by-case basis.” Polytechnique, McGill and Carleton universities did not respond to requests for comment.

Jim Hinton, a patent lawyer based in Waterloo, Ont., said the company’s shift in approach to patents “shows that industry partners are willing to give Canadian universities more if Canadian universities understand to ask for more." But he added that it was unclear whether Canadian companies will benefit from this by being able to license the intellectual property at reasonable rates for the purposes of commercializing new technology.

“The devil is in the details,” said Ottawa patent lawyer Natalie Raffoul, who noted that many questions remain, including whether Huawei would have an exclusive licence on the patents and what the profit-sharing provisions would be.

Mr. Liang said Huawei’s Canadian operation generated US$420-million in revenue in 2018, US$270-million from sales of its telecom network equipment and US$150-million from its consumer smartphone business.

The company employs more than 1,100 people in Canada and, during a sit-down interview with The Globe in China earlier this year, Mr. Liang noted the company had 181 open job postings for research and development-related roles. Huawei pointed again to those hiring plans during its press conference on Thursday. It also said it plans to increase its R&D spending in Canada by 15 per cent this year (although that is a slower pace than last year, when it spent US$137-million, a 28-per-cent increase over 2017.)

Controversy around Huawei has swirled for months and intensified with the arrest of chief financial officer Meng Wanzhou in Vancouver late last year. She is subject to a U.S. request for her extradition. The United States has organized a global push to persuade its allies not to work with the Chinese company, citing heightened security concerns around 5G networks. Of the country’s “Five Eyes” intelligence-sharing allies, Australia has committed to banning Huawei for 5G.

But earlier this week, New Zealand walked back some restrictions of its own and said it had not made a final decision. And British intelligence officials said a total ban on Huawei equipment for 5G is not necessary. Many telecom carriers, including Canada’s BCE Inc. and Telus Corp., which have used Huawei equipment extensively for their current 3G and 4G networks, say they appreciate the company’s innovation.

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In recent weeks, other European players, including Germany, have also refused to rule out Huawei from 5G and on Thursday, U.S. Secretary of State Mike Pompeo appeared to hit back, saying during an interview with Fox News that the United States would not be able to partner with or share information with countries that use Huawei equipment.

Responding to attacks on Huawei’s reputation, Mr. Liang said on Thursday he does not see them as a negative. "It’s like a free round of advertisement for the company. Now the whole world knows us and they know that Huawei has been fixated on by such a strong nation [the United States].”

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