Trade Secret Theft Just As Problematic in Asia

The trade secret theft issues that plague U.S. companies are apparently just as bad in other countries, as a recently filed Japanese lawsuit illustrates.

On October 25, Nippon Steel & Sumitomo Metal Corp. sued its South Korean rival, Posco, and a former Nippon Steel engineer who retired from Nippon decades ago, alleging that Posco and the engineer stole Nippon’s technology for manufacturing specialized steel.

Nippon Steel & Sumitomo Metal is the second-largest steelmaker in the world, and Posco is ranked fifth.

According to a report in The Asahi Shimbun, “manufacturers in South Korea and China are aggressively recruiting Japanese retirees or former engineers with many years of experience in the electronics, machinery and auto industries.”

According to a 2011 survey by the Ministry of Economy, Trade and Industry, 40 percent of manufacturers with overseas operations polled said there had been confirmed or suspected cases of technology being leaked to rival companies.

Of these respondents, 17 percent said that the technology was leaked by their former employees.

In an increasingly globalized marketplace, where cross-border recruiting is commonplace, such lawsuits can only be expected to become more frequent. Executives with access to trade secrets should be aware that more and more companies are monitoring what their former executives are doing after they leave.  So executives must be constantly aware of their actions so as to avoid even the appearance of impropriety, particularly when moving from one competitor to another. 

And this is where many executives get sued even if they don’t use any confidential information against their former employer, because just looking like you have done something inappropriate can get you sued.  Most companies want to act on this very quickly and don’t have the luxury of doing a full investigation.  So “shoot first, and ask questions later” has become the norm. 

Executives pondering such a move are advised to seek legal advice before making such a move.

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