Foxconn and BYD: who moved one cheese?

Keywords: Foxconn BYD Foxconn three v. BYD enterprises intellectual property

The world brand laboratory reports: in the IT industry, enterprise among the events already commonplace waqiangjiao, "digging" in real terms is digging techniques. Foxconn and BYD's trade secrets dispute, at least not yet finalised, but this lawsuit highlights modern enterprises the vital importance of intellectual property protection

Foxconn three v. BYD

November 6, 2007, in Beijing minzu hotel, 2nd floor, splendid Palace, a forensic expert hearing raises several media attention. This hearing is of extraordinary importance. The parties were the first big mobile phone manufacturing enterprises — Foxconn group and the first great second phone battery manufacturer — BYD co., Ltd. Hearings have not only the Shenzhen intermediate people's Court and the trial judge of the Supreme Court of two co-chairs, a 15-Member of the large group of experts, and invited the most Supreme People's Procuratorate, the Ministry of public security, the State intellectual property office and the State Council, and other related aspects of intellectual property business sectors as hearing participants. Identification of core evidence was seized in BYD company of a set of system files, Foxconn says this system file belongs to himself, the BYD steal; BYD call their files from public sources. Therefore, this system file belongs to public knowledge has become the core of identification.

In June 2006, Foxconn Group's two subsidiaries--Shenzhen futaihong precision industry co., Ltd. and Hong Fujin precision industry (Shenzhen) co., Ltd., to steal trade secrets by a paper petition, BYD co., Ltd., the Shenzhen City intermediate people's Court, the BYD company claims 5 million. This hearing is that the cases on the trial of an important part. The result of the decision of the hearing is not only the Shenzhen intermediate people's Court commercial espionage cases the results of qualitative and trial, more likely to affect the prosecution in Hong Kong, cases of up to 650 million in the merits of progress. Because, apart from Shenzhen, Foxconn is also presented in Hong Kong on BYD had two proceedings.

In June 2007, BYD is about to bring mobile phone parts and components business in Hong Kong on the eve of the split listing, Foxconn and parent company Taiwan Hon Hai group join forces in the Hong Kong Court BYD theft of trade secrets, and dishonest use of the information. Foxconn announcement said the "BYD knows or ought to have known of the confidentiality of such information, but the BYD permit or acquiescence of improper use of the information and the establishment of a similar with Foxconn extreme mobile production system. "Foxconn's remedies including: forcing the prohibition of the use of the confidential information of BYD, forcing the BYD produced as a result of the use of confidential information, the profits and non-specific compensation.

BYD is then issued a public notice emphasized, "the Group did not violate the Foxconn related company's trade secrets," and "possess sufficient resources to handle litigation without impeding the normal day-to-day business operations. ”

This action as of September 27, 2007 BYD to submit new stock exchange listing applications still no decision. 2007 October 5, because the defendant body changes, Foxconn to Hong Kong Court revoked the original action and 9 October new proceedings, proceedings of the reason is the same as with the last action: ban the use of confidential information of BYD, confiscation of the adoption of the relevant information and specific of profit raised a total of 650.7 million yuan of claims.

The two companies in a series of proceedings between what why and why daggers from?, disputes continue?

What non-hatred.

Foxconn Electronics is the first investment in the Mainland of Taiwan-funded enterprises, the parent company, is one of Taiwan Hon Hai precision industry co., Ltd. The production area covers precision electrical connectors, precision wire and assembled, computer cases and access system, computer system Assembly, wireless key parts and Assembly, LCD display equipment, semiconductor devices, alloy materials, etc., is China's largest electronics professional manufacturer, is the world's largest mobile phone manufacturer OEM. World famous electronic brand Nokia, Motorola, Hewlett-Packard, Dell, IBM, Intel, and so are its largest customers. In 2006, Foxconn technology group's main business income over liangqianyiyuan RMB, exports of over two hundred eight billion dollars, under more than one company in Hong Kong and Taiwan regions listed in the world top 500 154-digit.

BYD co., Ltd. was established in Shenzhen in 1995 of an enterprise, initially started with mobile phone battery business. In July 2002, BYD company in Hong Kong IPO motherboard. Currently the world's second largest manufacturer of rechargeable batteries. Since 2003, BYD has entered the mobile phone manufacturing areas. At present, the company's business covers mobile phone batteries, cell phone manufacturing and automobile production areas, the output value of more than $ 10 billion.

In today's hearing, Foxconn Group executives disclosure, to discuss cooperation project, 27 November 2002, Foxconn electronics Shenzhen China headquarters has invited BYD AG's CEO Andy Fu team visited the company's mobile phone factory production lines and subsequently prevented an intention of cooperation. Soon after, BYD set out to establish the third Division, began acting processing mobile phone parts and products. From the beginning of 2003, BYD continued by various means, the lure of Foxconn's employee turnover, move on to the work, job hopping BYD number up to 400 passengers, including Foxconn spend tens of mission to the European culture of senior technical personnel and high level managers. Foxconn also continuously discover BYD's technicians to Foxconn internal staff to send e-mail messages, when they switched to BYD work and the commitment to quit ' will get preferential treatment.

In fact, Foxconn and friction between the BYD has continued over the past few years, with Shenzhen police have dealt with four Foxconn employee job hopping to BYD, theft of trade secret Foxconn's case, two people have been sentenced by the Court.

Annual report of the public from BYD

In the display, the company in 2006 mobile phone manufacturing revenues exceed 51.35 billion RMB, a 2005 19.06 billion increased 169.3%, compared with 2004 9.39 billion is increased by 4 times. In the first half of 2007, BYD 86.2 billion turnover, mobile phone parts and Assembly business was 51% performance increase, reaching 31.68 billion scale.

On the one hand, the Foxconn employee constantly switched to BYD, BYD phone business explosive growth. To this end, Foxconn group a competent mobile business manager pointed out that our company in this industry, which already have some experience can follow and refer, even in this case our company received the first mobile phone orders to build a relatively complete, customers can have recognized by the system took three years and spent three years to enable business stability, sustainable growth, i.e. the total spent six years time. The BYD automobile and originally made, cell phone batteries by the end of 2002, or 2003 is simply not do cell phone business, so a bit of experience of enterprise, just three years, it has realized the mobile phone business income 51 billion each year to 169% of this growth. That is, its mobile phone business of BYD from scratch, from weak to strong this burst of growth is not normal, but this growth process with our company's side business secret files a lot of loss, a large number of employees, job hopping is congruence, so in our opinion, this obviously cannot be explained by coincidence.

BYD a party on this view is that employees quit, which in the enterprise is very normal mobility, and that they also have a lot of people move on to the Foxconn group. Foxconn electronics Commerce Secretary LI Jinming interview, believes that the business-to-normal mobility to the enterprise and staff have benefits of different levels, but if for some people's mobility, job hopping, causing the original enterprise key trade secret theft, this is not a simple issue of mobility.

Foxconn group of lawyers Jing-introduction, Foxconn in discovery of a large number of files stolen company, requests to take evidence in Shenzhen intermediate people's Court to preserve the measure, the Shenzhen intermediate in BYD company office location seizing Liu Xiang army and less green two-person Division in BYD office computer hard disk content, Liu Xiang army and less green before the Division is responsible for the mobile phone design departments of Foxconn's senior management cadre, after successive period of the contract that is not due to various reasons of resignation, and immediately went to the BYD. Been seized computer hard disk is one of the key evidence in the present case, it is submitted to the judicial expertise of primary materials. Evidence in the Organization of the Court, be subject to an investigation at the scene on the computer hard disk is turned on, she and Foxconn group of another lawyer to see that the hard disk is approximately 89 thousand paper, including exchanges of electronic documents, attachments, including the text of the written WORD of Foxconn version file. Also write a text header file BYD, scan files, files with the mark of Foxconn, following the company still Foxconn related managers signature. The main contents of the file is "how to dig the Foxconn." Foxconn group asked the experts, these system files are not known to the public, whether it is proprietary.

System file value geometry

Panoramic view of the Foxconn v. BYD commercial espionage case, its main focus on three arguments: the first is the submission of the required identification Foxconn system file is not known to the public, that is, whether you have non-intellectual; second, the system file belongs to Foxconn proprietary, constitutes trade secrets; third, BYD is using the Foxconn's system files, it does constitute a violation of business secrets. Among these, the nature of the system files that have become the key to the case. Foxconn's own system file theft made claims in litigation, then the system file?

It is learnt that the system files to production processes of norms, simply put, the system files is the Organization of mobile phone production of Foxconn, management processes and standards. System files from the processes and forms, which process is the production of a written description of the management procedure, and the form is in accordance with the procedure set out in the table, workers need only fill in the form of itemized their completed work, can effectively guarantee the production of an orderly manner. International corporations, such as Nokia, Motorola, etc, in order to guarantee the quality of the product, usually on the producer has set of system management and management of ISO9000 certification, the type of expression, that is, to the corresponding system files. It can be said that there is a complete seamless system files, the tickets for the multinational OEM.

Hearings, Foxconn group head of mobile business of Dai Fong tree Manager explains, in order to write process system files, Foxconn has concluded, refine more than 20 years experience in the production of the workers; to write a disaster prevention system files, Foxconn put experienced 9 · 21 earthquake, SARS period of painful lessons learned refining written; in order to write experimental system files, Foxconn spend millions of dollars from Nokia, Motorola buying machines to device. The preparation of these documents is after many years of accumulated experience, have spent a lot of effort to do it, is the proprietary Foxconn group.

For Foxconn has repeatedly emphasized that the combination of painstaking preparation system files, BYD is a completely different view of what Foxconn submit identification of the system information file is public knowledge, BYD has no direct use of the system files. BYD's system files is based on industry standards, certification and standards and requirements of customers, large and referred to other public documents. For this identification, BYD party submitted a large number of open documents as evidence, Huawei's Handbook, Shanghai Bell's PCB design specifications, and downloading of circuit board production process knowledge. However, the catch is that there are also written on paper with the "non-disclosure agreement, the words" shall not be disclosed. Why has this situation, the BYD party do not respond to the hearing, one expert.

At the same time as the BYD party has still not provide own system files, hearing specialists require 7 days.

Business competition or intellectual property rights protection

Related in the industry believe that Foxconn and BYD in business competition is aided by coincidence. Previously, BYD publicity departments said, Samsung, Motorola, Nokia, Sony Ericsson, TCL, Haier, Huawei, Philips, Amoi are OEM customer phone BYD. Although Nokia, Motorola is still the main OEM manufacturer Foxconn, BYD's current customer growth is the most direct of Foxconn. "On the one hand, BYD will triage Foxconn's orders, on the other hand, many a competitor, will also reduce the presence of the brand customers Foxconn's bargaining power. "Industry analysts think so.

As Foxconn sued BYD's footsteps and BYD plans to split cell phone business is closely linked to the pace of the market. Some of the media that Foxconn v. BYD's main purpose is to frustrate the BYD mobile phone business in Hong Kong the split listing.

BYD Ministry Manager Huang Zhang hui in the face of reporter, first known as the company did not authorize the external statements, later said that the prosecution should have more of a reason, block listing is one of them, and said, "someone else's purpose, you are not a good guess." BYD investor stakeholders earlier media interviews also stated: "Foxconn is to give the disturbedby BYD stamp making trouble. "And stressed that" BYD's split listing plan will not be subject to lawsuits. ”

To this end, Foxconn party response: this comment is one-sided. Foxconn electronics Commerce Secretary LI Jinming interview, stressed that "Foxconn sued BYD violations of trade secrets and made the split listing applications BYD is not in the same period of time. In fact, as early as one year and a half ago, BYD commercial espionage, Foxconn has already begun to take legal means, just because the case investigation process slow, so only to the outside world a misunderstanding ". Li Jinming's view, this case should not be seen as competing by so-called "business", it is a violation of intellectual property is concerned.

The bottom line is the imitation of the strategy

In fact, BYD in rapid development, has been actively advocating the imitation of the strategy.

BYD Chairman Andy Fu openly to the media said: "we make heavy use of non-patented technology, a combination of non-patented technology integration is our innovation. "In the field of BYD automobile also has its own IP strategy. Has someone BYD F3 jokingly production as "BYD Corolla", even after you have purchased a BYD F3, BYD flag removed, replaced by Toyota Corolla. Both in the form of amazing similarity, it is reasonable to speculate BYD company designed to copy a Toyota Corolla, "" but, more importantly, a clue is the BYD F3 car parts even can and Toyota Corolla General. (According to the IT Manager world report)

Andy Fu maintains that BYD F3 never got into the intellectual property of the lawsuit, because they do not infringe any intellectual property right of any of the products: "intellectual property rights, to respect, but can be avoided. Our car has no patent issues. "Undoubtedly, copy it really is a shortcut to imitated the predecessors, but the copy is to be smart. Andy foo finds little wisdom embodied in the patent infringement for circumvention.

This mimics the strategy in the it industry has always been a popular development mode, BYD imitation Foxconn mobile OEM business development model was also not surprising. Just, from imitation to proceed to trial, it seems that deviate from the normal path. Imitate the smell of nature some variable or beyond the leap alignment?, Foxconn group of Commerce Minister Li Jinming thinks: "in fact, all over the world, mimic the strategy has been implemented, this is the economic development of a law. From the early days of Japan, Taiwan, and mainland China. But imitate strategy to establish the infringement of intellectual property rights of another. Is it cannot go beyond the law's bottom line, when you use illegal means to obtain the intellectual property rights of others, they should be punished according to law. ”

In recent years, many violations of the trade secret of events focused on the it industry, in the it industry's widespread core technical experts frequently job-hopping, commercial secret is not guaranteed, intellectual property infringement and other disturbed IT enterprise development. According to statistics, it enterprises of job-hopping is about 30%-40%. Enterprise among the events already commonplace waqiangjiao. "Digging" essence is digging techniques. Through the "dig", an enterprise can in a short time to clone a competitor of the same production line, save the initial research and development costs, product huge enterprise tended to achieve rapid development and growth. However, this phenomenon is not conducive to building industry fair competitive market order and will make is in the formative stage of IT enterprises have suffered unfair competition and loss of global competitiveness.

From Taiwan and the Mainland, in the IT industry, the industry's opponent in this team to dig people to get a variety of commercial information events abound, but unfortunately, the strategy is difficult to replicate, the operator could not be copied, talent, culture could not be copied, the decision cannot be copied to copy the real competitiveness cannot be copied. An enterprise wants to further develop, simulate strategy alone is not possible, it is also to achieve independent innovation, and enhance market competitiveness.

Foxconn group Commerce Secretary LI Jinming admits: "Foxconn has always attached great importance to the enterprise of independent innovation, constantly intensify research efforts, we have a very large research teams, including the world's top big mold design and manufacturing teams. Some outsiders think Foxconn do OEM business just orders only, lack of technical content, in fact, this is a misunderstanding of the modern world, manufacturing enterprises need independent innovation, enterprises should introduce a lot of technology. A enterprises

Industry if you do not have the capability of independent innovation, and that it is difficult to get the order, it is difficult to be customers of conceptual products designed and manufactured. ”

As our dispatch, the journalists have also been told that new development of the event: BYD Division engaged in mobile phone parts and components and modules business listing through Hong Kong listing hearing, amounted to 8-10 billion. The unit is expected at the beginning of December in the listing prospectus, month. It was called BYD company Board bulletin, the company from 2 November to apply for a stay of the High Court of Hong Kong S.A.R. Hong Kong new proceedings on the application of scheduled for 2008, June 11, a hearing, the hearing for two days.