Friday, October 30th 2020

IP Theft: UMC Pleads Guilty to US Court Charges of Trade Secret Theft, Faces $60 Million Fine

Taiwanese corporation United Micro Electronics (UMC) has pled guilty on charges of trade theft. The charges, originally pressed in November 2018 by US authorities, placed UMC and China's Fujian Jinhua in hot waters under suspicion of stealing trade secrets from US-based Micron technologies, one of the world's foremost players in memory semiconductor technologies. UMC's guilty plea serves as a way for the company to avoid heavier penalties, and includes a provision for the company's assistance in investigating Fujian Jinhua's actions in regards to this IP theft.

The whole story revolves around UMC's hiring of three Micron employees from Micron's subsidiary in Taiwan, Micron Memory Taiwan (MMT), back around September 2015. At least two of these employees migrated Micron trade secrets to UMC, which then inked a deal with china's Fujian Jinhua for the development of 32nm DRAM and "32Snm" DRAM technologies that Fujian Jinhua could then deploy for the manufacture of memory products - a deal which had Fujian Jinhua paying $300 million for equipment purchase plus $400 million for technology development to UMC. This all fell in line with the Chinese government's Made in China 2025 plan, which aims to bring the country to semiconductor independence from the western world. UMC says that the company itself didn't partake in the underhanded IP delivery to Fujian Jinhua, claiming instead that rogue employees did so of their own volition. The company further states that it only pleads guilty because according to the US Trade Secrets Act, the company still bears legal responsibilities for employee acts, whether or not top management is involved.
Sources: Financial Times, The Register
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31 Comments on IP Theft: UMC Pleads Guilty to US Court Charges of Trade Secret Theft, Faces $60 Million Fine

#1
OGoc
Person steals $1 million: jail time... price paid by entire family.

Company steals a $700 million deal: $60 million in fines.
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#2
lexluthermiester
OGoc
Person steals $1 million: jail time... price paid by entire family.

Company steals a $700 million deal: $60 million in fines.
Your point was what?
Posted on Reply
#3
xman2007
Made in China, stolen from everywhere else.

Honestly the rest of the world should follow the US and boycott everything from them, let them keep their own crap in their own country and see how they get on with made in China 2025 then cause without all their crap exports their economy would crumble, let's stop pumping money into the communist regime who only care about control over their own people and soon if given the chance the rest of the world.
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#4
Zareek
A slap on the wrist for a company like that, our justice system is a joke.
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#5
lexluthermiester
Zareek
A slap on the wrist for a company like that
60million is not a slap on the wrist for that company, it a hefty chunk of their bottom line.
Zareek
our justice system is a joke.
While I would generally agree with you, what are they going to do? They can't prosecute the company executives criminally because there would be no way to extradite them and that's IF you can prove who did what & when. It's much easier to prove the wrong-doing of a company selling products than it is to prove individual liability given that the company is an entity external to the US. What has been done is the best we can do.
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#6
ExcuseMeWtf
OGoc
Person steals $1 million: jail time... price paid by entire family.

Company steals a $700 million deal: $60 million in fines.
Kind of hard to get $60M out of most people...
Posted on Reply
#7
Zareek
lexluthermiester
60million is not a slap on the wrist for that company, it a hefty chunk of their bottom line.
They made $359Milllion in Q2 2020 alone. A hefty chunk would be at least a quarter's worth of revenue. This is the same kind of thing that happens with memory price fixing. They make way more money by doing something illegal than what they get fined for doing it. The fine should be equal to at least twice what they can profit from it. Unless they lose money there is no incentive to do the right thing. That's all big business knows, profit!
Posted on Reply
#8
lexluthermiester
Zareek
They made $359Milllion in Q2 2020 alone. A hefty chunk would be at least a quarter's worth of revenue.
You just argued against your own point.
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#9
R0H1T
Zareek
That's all big business knows, profit!
You could say the same about literally any major lawsuit settled in the US, including but not limited to Intel vs AMD. Nvidia GTX 970 class action lawsuit, Apple's bendgate (antennagate?) et al. If the US justice system was actually fair, not unlike many other courts around the world, these companies would not get off with a slight touch on the wrist ~ yup these aren't even slaps for them!

No matter where you are & who you are it's all about the money all the time, in that sense politics & power/influence trumps them all. As an aside this should also tell you that big business has an insurmountable influence even in the most powerful nation on earth.
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#10
Frick
Fishfaced Nincompoop
lexluthermiester
While I would generally agree with you, what are they going to do? They can't prosecute the company executives criminally because there would be no way to extradite them and that's IF you can prove who did what & when. It's much easier to prove the wrong-doing of a company selling products than it is to prove individual liability given that the company is an entity external to the US. What has been done is the best we can do.
The thing is the execs wouldn't be affected even if they were in the US.
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#11
R0H1T
Technically the Justice system could've crippled them with billions of dollars worth of fines, but they chose not to do so. Making them pay such vast sums, especially as they're backed directly by the PRC, is a separate matter though.
But if the court has sided with the U.S. DoJ's allegations and found JHICC and UMC guilty of things like corporate espionage and IP theft, each company would have faced forfeiture and a maximum fine of more than $20 billion. Such sums would have inevitably destroyed both JHICC and UMC.
www.tomshardware.com/news/umc-micron-ip
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#12
Chrispy_
$60M fine is basically pointless. They stole the golden goose that's going to lay them $100M golden eggs every month.
Posted on Reply
#13
Raevenlord
News Editor
lexluthermiester
You just argued against your own point.
He meant that the fine should be equal to those 357 million (equal to a single Q revenue)
Posted on Reply
#14
Nater
xman2007
Made in China, stolen from everywhere else.

Honestly the rest of the world should follow the US and boycott everything from them, let them keep their own crap in their own country and see how they get on with made in China 2025 then cause without all their crap exports their economy would crumble, let's stop pumping money into the communist regime who only care about control over their own people and soon if given the chance the rest of the world.
They should be completely isolated from the rest of the world. That's a big frog to start boiling at this point though. Too many Wal*Marts and Dollar Generals dealing the crack to hungry consumers.
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#15
the54thvoid
Taiwanese company steals IP, sells it to China.

I'm just bolding that for those that neglect the actual theft was by UMC. A Chinese company paid UMC a hefty sum for said IP. So, the basis for a neutral conclusion is UMC saw a way to profit from Chinese company and stole the IP to sell it what it wanted. While I was writing this, I then recalled all the Samsung, Apple, Nokia, etc, patent lawsuits. Ocurred to me that all tech companies dabble in IP theft and patent misappropriation (like when UBER stole tech from Google).

It's quite funny, I looked back on things and in the 1800's the UK had strict provisos on machinery for cotton manufacture and forbid skilled workers from moving ot the US. This is when the UK was far more 'advanced' than the US. But the US managed to get its hands on UK industrial IP. Without it, they'd have been way behind in industry. No more Levi's! Anyhoo, my point is, the victor always gets to slap down the minion. Those at the top got there by stealing from others. It's just that history forgets those details. Victors writing history and all. If you want to investigate the immorality of IP acquisition, try this man (who helped bomb London) - Wernher Von Braun. Hello moon landings.
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#16
Zareek
lexluthermiester
You just argued against your own point.
How so ?
$60M < $359M by a long shot, I also said at least. Double what they made from it would be fair IMO. I never said anyone needed jail time just big fines. Fines that would make another company think twice about doing the same thing.
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#17
lexluthermiester
Zareek
How so ?
$60M < $359M by a long shot, I also said at least. Double what they made from it would be fair IMO. I never said anyone needed jail time just big fines. Fines that would make another company think twice about doing the same thing.
Your numbers are a bit off. However, even if we assume they're correct, 60million is a hit to their profits and will affect their bottom line hard for the entire year. 60million is not a slap on the wrist.
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#18
Gruffalo.Soldier
I'm the only one
the54thvoid
If you want to investigate the immortality of IP acquisition, try this man (who helped bomb London) - Wernher Von Braun. Hello moon landings.
The Americans conveniently swept the fact that he was a paid up Nazi under the carpet to get what they wanted. He quite possibly worked hundreds of people to death to have the V1 and 2's made.
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#19
Bones
Most of the time when a company does this they "Assume" they could get caught, get fined and they have at least some $$ set aside for that.
Doing shady business had consequenses and they know it - Getting caught and having to pay a fine or something is just a risk of playing the game.
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#20
the54thvoid
^^ the richer the company or individual, the more risks they take.
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#21
zlobby
$60mil are pocket change among tech giants. A prime example are intel - they choose to willingly pay lawsuits instead of terminating their bad practices only because it was still more profitable.
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#22
yotano211
Zareek
They made $359Milllion in Q2 2020 alone. A hefty chunk would be at least a quarter's worth of revenue. This is the same kind of thing that happens with memory price fixing. They make way more money by doing something illegal than what they get fined for doing it. The fine should be equal to at least twice what they can profit from it. Unless they lose money there is no incentive to do the right thing. That's all big business knows, profit!
Big or small business have to make a profit. I own a business of selling online and in person, my small business needs a profit to reinvest back into the business. How else am I going to have money to upkeep this sailboat.
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#23
Caring1
R0H1T
As an aside this should also tell you that big business has an insurmountable influence even in the most powerful nation on earth.
Which nation would that be?
Most major nations brainwash their residents to believe it's their nation.
Posted on Reply
#24
R-T-B
tigger
The Americans conveniently swept the fact that he was a paid up Nazi under the carpet to get what they wanted. He quite possibly worked hundreds of people to death to have the V1 and 2's made.
More a space enthusiast who turned a blind eye to some very nefarious shit in pursuit of someone to fund his rocketry research.

Not that it's much better, but it is slightly better.
Caring1
Which nation would that be?
Most major nations brainwash their residents to believe it's their nation.
Militarily speaking, by budget alone, it can only be one. It's not even in the realm of question. USA spends more on military than Russia and China (and for that matter, the entire top 10) COMBINED.

And pretty much no one but third world nations question that bit.
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#25
DeathtoGnomes
xman2007
Made in China, stolen from everywhere else.
The price of doing business with China in a nutshell.
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