Taiwan foundry UMC (UMC) announced Thursday (Oct. 29) that it has admitted to violating trade secrets and reached a settlement with the U.S. Department of Justice (DOJ) to pay a $60 million fine to the U.S. government in response to a 2018 DOJ lawsuit against UMC for violating the Trade Secrets Protection Act.
In November 2018, the U.S. Department of Justice announced the indictment of Chinese state-owned enterprises Fujian Jinhua and Taiwan UMC for engaging in economic espionage with three Taiwanese nationals and stealing business secrets from U.S. memory maker Micron. In a press release dated November 1, 2012, the Federal Bureau of Investigation (FBI) made clear that China’s theft of leading U.S. technology posed a threat to U.S. national security.
UMC said in a statement on November 29 that the settlement agreement included an agreement by the U.S. Department of Justice to drop the original charges against UMC, including charges of conspiracy to commit economic espionage, conspiracy to steal many of Micron’s trade secrets and patents, and damages and penalties that could range from $400 million to $8.75 billion. UMC pleaded guilty to infringement of a trade secret, agreed to pay a U.S. government fine, and also cooperated with the U.S. Department of Justice in a follow-up investigation during a three-year self-administered probation period.
UMC stole Micron’s trade secrets to save money and time in developing memory processes and to allow China to strategically achieve “self-supply,” Deputy Attorney General Jeffrey A. Rosen said in a press release on May 28. “This prosecution is an example of how the U.S. Department of Justice successfully defends U.S. companies against attempts by others to steal their technology.”
The case stems from a 2016 cooperation agreement between Taiwan’s UMC and China’s Fujian Jinhua to help build a factory and develop memory process technology. The DOJ noted that UMC hired the three employees who were later indicted. One of the indicted Taiwanese, Chen Zhengkun, was a senior vice president at UMC and was seconded to Fujian Jinhua as general manager in 2016; the other two indicted Taiwanese worked at Micron in Taiwan and later joined UMC with Micron’s confidential information.
“UMC never intended, nor did it transfer, any unauthorized information to Jinhua.” UMC says it does not allow any of its employees to bring information from their former employer to UMC, but the two employees sued in the Fujian Jinhua case violated the rules by bringing Micron’s business secrets to the company. “Under the U.S. Trade Secrets Act, a company can be held liable for the actions of its employees even if the employees violated company policy without the knowledge of company officials. Accordingly, UMC acknowledges and accepts liability for employee violations of the law in the settlement agreement,”
In a statement, UMC Chairman, Mr. Hung said, “We are pleased to have reached an agreement with the U.S. government, and will continue to implement and strengthen our policies and measures for the protection and prevention of trade secrets, including regulatory mechanisms for confidential information, training and audits for intellectual property rights protection, etc., to ensure that our daily operations are in compliance with the Company’s intellectual property rights and information security protection policies. “
The U.S. Department of Justice also noted that the criminal prosecution of Fujian Jinhua and the three defendants will continue. Rosen said that UMC’s guilty plea leads the case to a trial against Fujian Jinhua in 2021 and that “prosecuting trade secret cases protects freedom and innovation. When foreign defendants are accused of stealing intellectual property protected under U.S. law, these cases have global significance.”
Micron said in a statement on May 29: “Micron appreciates the efforts of the U.S. Department of Justice to prosecute and punish the theft of Micron’s trade secrets. The guilty verdict announced today reaffirms that misappropriation of trade secrets is a serious crime and that reckless conduct will lead to serious consequences.” Although the U.S. Department of Justice has reached a settlement with UMC, Micron will continue to file a civil lawsuit against UMC over the contents of its guilty plea and will seek full restitution from UMC, the statement said.
Recent Comments