HTC executives indicted for leaking trade secrets

Saturday, December 28, 2013
The China Post news staff with CNA

TAIPEI, Taiwan -- Six employees of leading Taiwanese smartphone maker HTC Corp., including its vice president of product design Thomas Chien (簡志霖), were indicted Friday on charges of leaking trade secrets and breach of trust.

The Taipei District Court late yesterday released Chien on NT$8 million bail. Wu Chien-hung (吳建宏), research and development director at HTC, was released on NT$5 million bail. The Court imposed domicile restrictions on both Chien and Wu and required them to report to the police every Monday and Thursday.

Three of HTC's materials suppliers were also indicted for allegedly helping HTC design executives make false expense claims of over NT$33 million (US$1.1 million).

In its indictment, the Taipei Prosecutors Office said Chien, who has been detained since Aug. 31, had stolen and leaked key icon designs to his would-be Chinese business partners in Beijing in June. The designs were for HTC's yet-to-be-unveiled smartphone interface.

Chien's actions were in violation of Article 13 of the Trade Secrets Act that bans stealing or unauthorized reproduction, revelation and use of key corporate business secrets, the indictment said.

Moreover, it said, Chien had colluded with Wu Chien-hung, HTC's research and development director, to defraud the company of NT$33.566 million by using fake invoices to inflate their expenses and demanding rebates from HTC's suppliers.

The indictment said Chien and Wu also betrayed their company's trust, as they had set up a separate firm and enticed their subordinates to work for them.

Prosecutors are seeking the maximum penalty for Chien, saying he showed no remorse during the investigation and put up specious arguments in an attempt to justify his illegal actions.

The other four HTC employees who were indicted are Justin Huang, senior manager of design and innovation; Huang Hung-yi, also a senior manager of design and innovation; Hung Chung-yi, a manager in the manufacturing design department; and Chen Shih-tsou, a rank-and-file employee.

Prosecutors said that all of them, except Hung Chung-yi, confessed in a remorseful manner to breaking the law, and therefore the court should be lenient with them.

In light of the fact that Justin Huang and Huang Hung-yi have settled their disputes with HTC and have been forgiven by the company, prosecutors recommended suspended sentences for the pair.

The three HTC suppliers indicted in the case were identified as Chang Chun-yi, Chen Jung-yuan and Chen Chung-kui.

Prosecutors suggested lenient sentences for all three of them, saying they were remorseful and very cooperative during the investigations.

The HTC case was the first of its kind since the Trade Secrets Act was revised early this year as part of the government's efforts to better protect Taiwan's trade secrets and international competitiveness.

The amended law that took effect in February allows heavier penalties for breach of its provisions.

Under the revised law, the maximum penalty for leaking corporate trade secrets for use in Taiwan is five years in prison and a fine of NT$1 million to NT$10 million. If the illegal gains in a case exceed NT$10 million, the fine could be three times the amount.

In cases where corporate trade secrets are leaked to China or foreign countries, the penalty is one to 10 years in prison and a fine of NT$3 million to NT$50 million. If the illegal gains in a case surpass NT$50 million, the fine could be two to 10 times the amount.

Meanwhile, Chien's action has also constituted a breach of trust stipulated in the Securities and Exchange Act, which carries a prison sentence ranging from three to 10 years.

Both Chien and Wu Chien-hung have been detained since Aug. 31 and the Taipei District Court will decide later in the day whether they should be granted bail or should continue to be held in custody.

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