Trade Secret Protection from a Corporate Perspective Paula S. Ruhr The Dow Chemical Company September 11, 2012 Disclaimer: The views presented today are those of the presenter, not of The Dow Chemical Company
Historical Perspective Dow was formed in 1897 by Herbert H. Dow First product was bleach Culture was open, collaborative and working together to provide better products, better ways of making them Worked very well for a significant time
The Dow Chemical Company - today Broad range of technology-based products More than 5000 products manufactured in 36 countries around the world Customers in about 160 countries Annual sales in 2011 of about $60 Billion About 52,000 employees worldwide
Ke Xue John Huang Chinese national educated in China and Japan; became a Canadian citizen Dow AgroSciences researcher from 2003 to 2008 Subsequently worked for Cargill Grand jury indictment in 2010 including charges involving theft or attempted theft under Economic Espionage Act
Ke Xue John Huang (cont.) Pled guilty to obtaining trade secrets from both Dow and Cargill and transferring them back to China Plea agreement estimates losses at $7 million to $20 million Prison sentence and then deportation
Wen Chyu ( David ) Liou Chinese national who came to US for graduate school and joined Dow in 1965 Retired from Dow in 1992 Convicted by a US federal jury of one count of conspiracy to commit trade secret theft and one count of perjury Sentenced to 60 months in prison, forfeiture of $600,000 and a $25,000 fine
Wen Chyu ( David ) Liou (cont.) Evidence presented included: While working as a research scientist, Liou had access to trade secrets relating to the development and manufacture of Dow elastomers Liou traveled extensively throughout China to market stolen information Liou conspired with other Dow employees to misappropriate trade secrets and market them to various Chinese companies Liou bribed one Dow employee with $50,000 to provide a process manual and other information related to a particular elastomer Liou lied in a deposition about having made arrangements for a co-conspirator to travel to China to meet with representatives of a Chinese company interested in designing and building a plant in China using the stolen information
Chung-hsien ( Johnson ) Tu Dow employee in Taiwan Resigned in 2004 Suspected of downloading thousands of confidential documents Tu is being prosecuted in Taiwan Case has been in prosecution for over 8 years; still no resolution Multiple appeals and re-litigation of same points despite very strong evidence Victim of trade secret theft heavily involved in gathering evidence, writing briefs, etc.
Minor departing employee trade secret theft If theft discovered, work with local police in China Provide evidence and support, police will arrest and hold Fines, etc. go to the police Used as deterrent to other departing employees
Learning from Litigation Forum is key In US, involvement of FBI, for example, opens many more avenues of evidence collection, etc. Working with the government in US is vital
Learnings from Litigation (cont.) In Taiwan and China, our experience has been that significant work must be done by the victim ; obtaining evidence can be more problematic; process is very slow Litigation, while necessary in various circumstances, rarely provides a remedy that makes one whole
If not litigation, then what? Solid hiring procedures Employee contracts Employee training Physical security fences, cameras, badge access, locked offices Computer security passwords, controlled access to data, monitoring access
If Not Litigation, Then What? Exit interviews In some jurisdictions, payment to enforce non-compete clauses Litigation when appropriate Establish corporate culture which recognizes and protects value of trade secrets
Corporate Culture Open and free flowing Need-to-know Trusting Guarded
Balance Appropriate concern vs. paranoia Efficiency/collaboration vs. safety of trade secrets