Wednesday, December 01, 2010

Did BAIC Know It Was Joyriding With Ford's Trade Secrets?

8 articles to go: IP Dragon on its way to its 1000th article

November 17, 2010 Xiang Dong Yu, an automobile engineer who worked for Ford Motor Corporation from 1997-2007, pleaded guilty to two counts of theft of trade secrets, as was announced by the Department of Justice of the Eastern District of Michigan.

Between December 20, 2006 and January 2, 2007 he worked for the Ford subsidiary in Shenzhen, China. According to the press release of the Department of Justice:

"Yu copied some 4,000 Ford documents onto an external hard drive, including sensitive Ford design documents. Included in those documents were systems design specifications for the engine/transmission mounting subsystem, electrical distribution system, electric power supply, electrical distribution system, electric power supply, electrical subsystem and generic body module, among others."

In 2007 he resigned and in 2008 started to work for Beijing Automobile Industry Company (BAIC). Maybe Ford found out copycat behaviour at BAIC or maybe Mr Yu left traces, either way, the FBI was investigating and when Mr Yu returned to the U.S. he made a stupendous mistake by bringing his BAIC laptop with the stolen Ford specifications on it.

Read more here.

In Hong Kong trade secrets can be protected by the action of breach of confidentiality,"entirely judge-made law, untrammelled by statutory modification," as Professor Pendleton put it jocularly. The judgements have been very generous to employees: basically everything you can memorise employees can keep. Mr Xiang of course downloaded files on a laptop. In China several statutory laws apply (contract law binds contract parties and unfair competition law can bind third parties, such as BAIC). See regulations relevant to trade secrets in China and Ms Pagnattaro's advice on how to protect trade secrets, here.

Yes, I have left the question of the title unanswered. Could or should BAIC have known that Xiang did not develop the technology during the time when he was working for BAIC? What is your take on the matter. Comments are welcome.

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