Case Brief #2 : Foxconn v BYD, Part B
After four individuals were convicted due to stealing trade secrets of Foxconn, the case took a dramatic turn when prosecutors dropped all criminal charges against BYD in December 2008. At the same time, the global manufacturing industry was hit hard because of the severe global recession starting in late 2008. To generate extra revenues for survival from the global recession, one of Foxconn's strategies was to increase investment in R&D of smartphones. As a result, it was imperative for Foxconn to enhance its IP management strategies.
According to the case, Foxconn implemented a series ...view middle of the document...
By doing this, employees could prevent company's trade secrets actively, rather than passively. Secondly, Foxconn should sign confidentiality agreements with its employees and keep them properly. As stated in the case, the reason of GE's victory in trade secret case against former employee was that GE was able to prove to the court that sufficient protection measures had been put in place to protect its trade secrets. Thirdly, Foxconn should pay attention to avoid disclosing information on patent applications. As stated in the cases, there were cases in China in which some domestic companies analyzed the patents filed by foreign companies, reserve the products and then applied for similar patents in China after making minor innovations.
Moreover, some legal management insights can be gained and any companies involved in China should apply them into practice. Firstly, due to the limited experience in handling IP cases, companies should avoid inexperienced courts by filing their IP cases in big cities in China, such as Beijing, Shanghai, Guangzhou and Shenzhen. Secondly, if companies try to protect their IP by patenting it, they should patent it as soon as possible. It is because that China has a "first-to-file" patent system, as opposed to the "first-to-invent" system in the US.
In conclusion, the threat of IPR infringement increased because of the global recession. Therefore, Foxconn and the other high-technology companies in China should make specific strategy to prevent their IP.