A federal judge has issued a preliminary injunction that prohibits Motorola Solutions Inc. from transferring confidential information by Chinese company Huawei Technologies to Nokia Siemens Networks, which is planning to buy Motorola’s networks business in a $1.2 billion transaction.

Huawei sued Motorola last month, arguing that the deal with NSN would represent a misappropriation of Huawei trade secrets. Motorola and Huawei have commercial agreements dating back a decade, during which Motorola bought Huawei network technologies and resold the equipment under its own brand.

Huawei and NSN sell competing hardware and software around the world, and Huawei said it did not want its proprietary information falling into the hands of a major rival. Motorola and Huawei had tried to work out an arrangement but failed to come to terms on safeguards that pleased both sides, and took the issue to court.

Last month, Judge Sharon Johnson Coleman issued a temporary restraining order in favor of Huawei. The new injunction, issued late Tuesday, replaces the temporary restraining order and will remain in effect until Huawei and Motorola resolve the issue in arbitration in Switzerland.

“Huawei has established that it will suffer irreparable competitive harm if its trade secrets are disclosed to NSN or are inevitably relied upon by former Motorola employees who transfer to NSN,” Coleman wrote.

The injunction threatens to scuttle the deal with NSN, as the Huawei-developed technologies represent a significant portion of the assets being transferred to the European firm. NSN could also walk away from the deal because lack of access to Huawei’s proprietary information means that the company might be unable to service or repair equipment it acquires from Motorola.

About 7,500 Motorola employees are slated to transfer to NSN when the deal closes, although the Tuesday ruling revealed that Motorola has seen “higher than average” employee attrition from its networks business since December because of uncertainty over the transaction.

The judge’s ruling revealed that when Motorola was shopping around its networks business in 2009, Huawei had submitted a bid in December 2009 and a revised bid in April 2010. The Chinese company was passed over in favor of NSN. Motorola and NSN announced their transaction in July. The deal still needs approval from the Chinese Ministry of Commerce’s Anti-Monopoly Bureau.

During court arguments, Motorola had said Huawei’s “true intent was to use its confidential information as a ‘poison pill’ to kill the Motorola/NSN transaction” as a retaliatory move for a lawsuit that Motorola has pending against Huawei regarding the alleged theft of trade secrets.

Among the safeguards ordered by the judge on Tuesday, Motorola and NSN have to retain a third-party inspector to make sure any records transferred to NSN do not contain confidential Huawei information. NSN will have to keep detailed records of any service it performs on Motorola equipment that includes Huawei products, and Huawei has the right to audit service records on a monthly basis while the injunction is in place.

NSN said Wednesday that it “is studying the ruling in detail to establish our next step.” The company added that “it remains our ambition to bring Motorola’s talented team on board as soon as possible.”

In a Tuesday statement, Motorola Solutions said it was “extremely pleased” that the judge did not grant certain requests by Huawei that would have blocked the sale to NSN — namely, preventing the transfer of employees and “carving out a portion of the business from the sale.”

Motorola added that it “respects and will continue to protect Huawei’s confidential information” and is still targeting the first quarter of 2011 for closing the sale to NSN.

Bill Plummer, vice president of external relations at Huawei, said the Chinese company never wanted to prevent the sale.

“It would be nice now for Motorola to shift its focus to substantive arbitration so we can actually build the appropriate structure and mechanism to ensure our intellectual property rights are protected, and Motorola can move on with its sale,” Plummer told the Tribune on Tuesday night.

“The point of this entire action was Motorola had been unable to assure us they were going to meet their obligation to protect the intellectual property rights. It’s not about us blocking the transaction between Motorola and a direct competitor.”