We've heard a lot (perhaps too much) about LED patent lawsuits. Well, there's more. Lawsuits and criminal proceedings can also result from trade secret violations and other intellectual property infringement.
(Note: I am not a lawyer, and nothing in this piece should be construed as legal advice.)
When DuPont suspected in 2009 that an employee had been spiriting away company information for his personal use, it filed suit against the employee for breach of contract. The chemist, Hong Meng, had been sending information about his OLED research to his personal email account in China. As part of a plea agreement, Meng was sentenced to 14 months in prison for theft of trade secrets.
Judicial complexity
This case illustrates the judicial complexity of a seemingly straightforward case of industrial espionage. First, Meng was in violation of company policy when he took company information off-campus. DuPont filed suit in Delaware, where Meng was employed. A subsequent FBI investigation led to federal criminal charges.
Trade secret matters are largely handled by state courts. The cases are typically based on contracts between companies or between a company and an individual, such as an employment contract. The Uniform Trade Secrets Act (USTA), which most states have adopted, is used as the standard for trade secret laws.
However, theft of trade secrets is a federal offense. And civil cases involving the US government, where a contractor alleges wrongdoing by the feds (and where the feds allow themselves to be sued) are heard in federal court. In July, the US Court of Appeals for the Federal Court affirmed a lower court's ruling that a trade secret suit against the US government must be heard in federal court, because it is based on a contract with the government.
Fact-bound
With patents, trademarks, or copyrights, the owner of the intellectual property can use a governmental registration process to affirm ownership. Identifying a trade secret, on the other hand, is fact-bound, meaning that a court determines whether certain information is a trade secret based on the particular case. To paraphrase the USTA's full definition, a trade secret is business information that is valuable because it is not generally known and that the owner makes reasonable efforts to keep a secret.
Unlike patents and copyrights, trade secrets have no time limit. This is the reason many companies guard their ideas as trade secrets, rather than as patents. The formula for Coca-Cola is a trade secret. If the formula were patented, Coca-Cola would have had to reveal it a century ago.
Outside the US
In 2012, six LG workers were charged with theft of trade secrets from Samsung. The indictment, filed in a South Korean court, alleged that former Samsung employees working with or for LG revealed secrets about Samsung's OLED technology. Samsung asked that the LG Display division apologize and promise not to do it again.
Not everything needs to be resolved by the courts. This year, Samsung and LG stepped back from the docket and agreed to work out their differences privately. The bitterness between the two Korean multinationals had taken a sinister twist when operatives from an Israeli company photographed secret documents from Samsung and LG and leaked the secrets to Chinese and Taiwanese competitors.
Trade secrets can be a better way of protecting intellectual property. They're cheaper and faster, because there's no lengthy application process. The secrets remain valuable as long as they're secret.
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