Case Details
Foxconn V BYD (A): Commercial Espionage or Learning by Hiring?
Foxconn International Holdings is the world's largest contract manufacturer of mobile phones. BYD Company Limited entered the market in 2003 and has pursued a learning-by-hiring strategy by actively recruiting workers from Foxconn. In May 2006, Foxconn first discovered a leakage of its trade secrets to BYD through current and former employees. Materials seized from BYD's premises were found to contain substantial non-public information belonging to Foxconn. A number of individuals involved were arrested and prosecuted. However, BYD declared that the information it possessed about Foxconn came from publicly available sources. Foxconn has concluded from internal investigation that BYD has been stealing its trade secrets systematically over a long period. Its management is contemplating pursuing criminal charges against BYD in order to protect its intellectual property ("IP").
(Please refer to case B for China's legal system for resolving IP disputes and factors that influence IP litigation outcomes in the country.)
Learning Objective:
Boundary between trade secret theft and learning by hiring. Prevention of trade secret thefts through proper human resources policies and secure information management systems. Appropriate strategies for handling trade secret thefts. Pros and cons of defending intellectual property rights through litigation.