UMC and its high-ranking employees were found guilty for infringing Micron’s Trade Secret

Factual Background:

United Microelectronics Corporation (UMC) and Fujian Jinhua Integrated Circuit Co. (JHICC) entered into technology cooperation agreement in January, 2016, where JHICC would provide funding up to US$ 300 million for UMC to research and develop DRAM-related technology. The result of UMC’s development would be co-owned by UMC and JHICC, and the developed technology would be transferred to JHICC for mass production. JHICC allegedly paid UMC US$ 400 million during the development process.

The defendants, Mr. Ho and Mr. Wang, were ex-employees of Micron Taiwan. Both of them came into possession of Micron’s trade secret when they worked for Micron Taiwan.

Mr. Ho, through the internal system, acquired trade secret related to manufacture of DRAM from Micron’s internal server, and then reproduced and stored the same in his personal hard drive. When Mr. Ho resigned from Micron Taiwan on October 15, 2015, Mr. Ho did not delete the trade secret he acquired. Rather, Mr. Ho took Micron’s trade secret with him and joined UMC on November 5, 2015. For his new work at UMC, Mr. Ho reproduced and stored Micron’s trade secret in the laptop UMC assigned to him.

Similarly, when still working for Micron Taiwan, Mr. Wang accessed and acquired trade secret related to manufacture of DRAM. Mr. Wang later on reproduced and stored the acquired trade secret in his personal hard drive, laptop, and then uploaded the same to his Google Drive account in April, 2016. In addition, when Mr. Wang joined UMC, Mr. Wang accessed Micron’s trade secret he stored in his Google Drive through his personal cell phone and laptop assigned to him by UMC, and downloaded the same to his smartphone, laptop, and portal hard drive. During the period of July and August of 2016, in order to facilitate UMC’s research and development of DRAM project with JHICC, Mr. Wang, under instructions of UMC’s Mr. Rong, downloaded Micron’s trade secret and provided Micron’s process parameters and relevant data to UMC’s engineers for subsequent test and design. Based on the information provided by Mr. Wang, UMC was able to save considerable time and cost in developing and designing the manufacture process.

Micron’s Trade Secret:

The confidential information allegedly misappropriated by Mr. Wang and Mr. Ho was related to Micron’s design rules, manufacture process, formula, circuit design, packaging design, chemical composition, model name of equipment for each process phase, and debugging data. This information was confidential in nature, and not publicly accessible for the relevant industries. In addition, the misappropriated information could not be easily acquired. It needs long term investment of cost and labor to research and develop. Thus, businesses that possess this information could be in a more advantageous position than those that do not. With the misappropriated information, businesses like UMC could save costs by expediting its research and testing. Thus, the misappropriated information is eligible for trade secret protection per Taiwan’s Trade Secret Act.

The Offenses Committed by Mr. Ho, Mr. Wang, and Mr. Rong:

Under the Trade Secret Act, the use of trade secret at least includes perusing, reviewing, compiling, and editing the content of trade secret. Here, both Mr. Ho and Mr. Wang had signed agreement with Micron Taiwan, premising not to disclose, misappropriate, or help third party acquire Micron’s confidential information after the expiration of their employment. However, after resigning from Micron Taiwan, Mr. Ho and Mr. Wang took trade secret they acquired to UMC, and perused, used, and reproduced the same for the interest of UMC. Further, Mr. Wang disclosed Micron’s process parameters to UMC’s manager Mr. Rong. As such, Mr. Ho’s unauthorized use and Mr. Wang’s misappropriation and disclosure all constitute violation of Trade Secret Act.

Mr. Rong is UMC’s high-ranking manager, in charge of leading Mr. Ho’s and Mr. Wang’s work performance, and implementing UMC’s joint development project with JHICC. As the supervisor of Mr. Ho and Mr. Wang, Mr. Rong not only failed to make sure they complied with duty of confidentiality, but also turned a blind eye on their misuse of Micron’s trade secret. Additionally, UMC’s general manager, Mr. Chen, also violated UMC’s security protocol by unlocking the USB port of the laptop assigned to Mr. Ho, so that Mr. Ho could access the confidential information he took from Micron by inserting his personal USB stick to the laptop. As such, both Mr. Rong and Mr. Chen failed to take the necessary measure to prevent the misappropriation and misuse of Micron’s trade secret.

Lastly, the district court judge found that part of Mr. Ho's salary came from JHICC, and that Mr. Wang and Mr. Rong were all aware of the fact that their use of Micron’s trade secret was for UMC’s development project with JHICC, and that the result of their research would be transmitted to Mainland China for mass production. Thus, they all infringed Micron’s trade secret with the criminal intent to use said trade secret in Mainland China.

The Penalty:

In view of the above, it is ruled that:

Mr. Ho is guilty for violating Paragraph 1 of Article 13-2 of Trade Secret Act, and shall be subject to imprisonment up to 5 years and 6 months, as well as a fine of NT$ 5 million.

Mr. Wang is guilty for violating Paragraph 1 of Article 13-2 of Trade Secret Act, and shall be subject to imprisonment up to 4 years and 6 months, as well as a fine of NT$ 4 million.

Mr. Rong should be subject to imprisonment up to 6 years and 6 months, as well as a fine of NT$ 6 million.

UMC should be subject to a fine of NT$ 100 million in view of the offenses committed by its employees.

The Cited Articles of Trade Secret Act:

Article 13-1 

Any person committing an act falling under any of the following circumstances for the purpose of an illicit gain for himself/herself or for a third person, or inflicting a loss on the holder of a trade secret shall be sentenced to a maximum of 5 years imprisonment or short-term imprisonment, in addition thereto, a fine between NT$1 million and NT$10 million may be imposed:
1. Acquiring a trade secret by an act of theft, embezzlement, fraud, threat, unauthorized reproduction, or other wrongful means, or using or disclosing a trade secret so acquired.
2. Committing an unauthorized reproduction, usage, or disclosure of a trade secret known or possessed.

Article 13-2

Any person committing a crime prescribed in the first paragraph of the preceding article for the purpose of using the trade secret in foreign jurisdictions, mainland China, Hong Kong, or Macau shall be sentenced to imprisonment between 1 year and 10 years, in addition thereto, a fine between NT$3 million and NT$50 million may be imposed.

Article 13-4

Where the representative of a juristic person, the agent, employee or any other staff of a juristic person or natural person commits any of the crimes prescribed in Article 13-1 or 13-2 in the course of business, not only the actor, but the juristic person or the natural person shall be punished with the fine prescribed in the Article. However, if the representative of a juristic person or natural person has done his/her utmost to prevent a crime from being committed, the juristic person or natural person shall not be punished.

Source:

https://www.judicial.gov.tw/tw/cp-1888-230692-b054f-1.html