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 of measures to prevent trade secret theft. For example, computer security was significantly tightened and filing patent applications to protect its R&D investments. However, more things should be emphasized on. First of all, Foxconn should foster a sense of belonging and company loyalty among its employees. Compared to tighten the computer security, this is a more efficient measure to protect its IP. 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