Compelling Involuntary Depositions of Inventors in Taiwan

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It is common in U.S. patent litigation for a party accused of infringement to seek to depose inventors of the patents-in-suit. If the inventors are officers, directors or managing agents of a party and live or work in the U.S., it should be a routine matter to compel their depositions pursuant to the federal rules of civil procedure (FRCP). If the inventors are located outside the U.S. and do not consent to be deposed, the process is more burdensome, but often their depositions can be compelled pursuant to the provisions of the Hague Convention or other relevant treaty.

However, the process may be especially difficult if the inventor is located in Taiwan, is unwilling, and is no longer, or never was, employed by a party. First, Taiwan is not a signatory to the Hague Convention, so any attempt to compel the unwilling witness will have to proceed by way of letters rogatory. Second, if the inventor is not an officer, director or managing agent, the FRCP won’t apply and one must find another legal basis for ordering the testimony.

A number of courts have found that legal basis in the invention assignment agreement that the inventor signed in order to give up his rights in the patent. Invention assignment agreements usually contain language requiring the inventor to render certain assistance to the assignee of the patent. Depending on the particular facts and contract language, it is not unusual for a U.S. court to order a party to produce a foreign inventor to testify at deposition or trial, overseas or in the U.S., based on the notion that the assignment agreement gives the party “control” over the inventor.

What the courts gloss over is the extreme difficulty a party may encounter attempting to compel the inventor to comply with the order if the inventor refuses. In Taiwan, in particular, parties generally lack such control. Continue reading →

Patent v. Trade Secret: Which is better?

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A few weeks ago, Taiwan’s second largest LCD panel-maker, AU Optronics (AUO), accused two of its former executives of selling AUO’s valuable manufacturing secrets to China’s second largest panel-maker, China Star Optoelectronics. AUO sued and Taiwan’s authorities launched a criminal investigation, but the former workers have both accepted employment with China Star and now AUO will presumably face a tough battle to prevent its competitor from using its secrets.

Some may wonder, if the secrets were so valuable why didn’t AUO patent them? After all, patents – not trade secrets – seem to make all the big headlines and manufacturing processes are patentable in most countries, provided they meet the basic requirements for patentability.

The answer is that patents tend to capture more glory than trade secrets, but each method of protection has distinct advantages and disadvantages. Neither is superior in all cases. A prudent company will choose one method or the other, in each particular case, based on a careful analysis of various factors. Continue reading →

10 Tips for Non-Disclosure Agreements in Asia

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Non-Disclosure Agreements (“NDAs”) often receive short shrift. Business persons plunge into sensitive discussions with third parties without bothering to obtain contractual protection or Legal issues the same NDA in every case, as if one-size-fits-all.

Whether one intends to disclose confidential information to prospective employees, partners, subcontractors, or others, it’s almost always prudent to first obtain a signed NDA. That’s especially true when doing business in Asia, where local laws and practices may pose unique challenges.

Here are 10 tips to help ensure your NDAs will do the job in Asia.

1. Non-Disclosure. The heart of an NDA is language prohibiting the unauthorized use or disclosure of certain information. The drafter of the agreement should first find out what types of information may be disclosed by each party, because the discloser will want stronger protection, while the recipient will want fewer restrictions. The agreement may require the recipient to use at least the same degree of care that it would use to protect its own confidential information, but at least a reasonable degree of care. Usually, the confidentiality obligations should be mutual. Continue reading →

Negotiation Training Course – KL, Malaysia, 10/24-25

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Seats are still available for this lively, results-oriented training session in Kuala Lumpur on October 24 & 25.

Hi. I’m Chris Neumeyer, Managing Partner of Asia Law and an international lawyer with more than 20 years of experience negotiating and drafting complex commercial and corporate agreements. I just returned from Bangkok, where I led this same lively two-day training course last week. Participants came from diverse functions and industries, but all came away with an increased awareness of key issues and tactics in contract negotiations, improved ability to achieve results and eagerness to put it into practice.

If you may wish to attend this training in KL on October 24-25 or have any questions, please write to marketing@VMACgroup.com or chrisneumeyer@asialaw.biz, but please hurry as spaces are filling up fast. Continue reading →

Taiwan Company Fined $500 Million for Illegal Price-Fixing

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Taiwan liquid-crystal-display (LCD) manufacturer, AU Optronics Corp. (AUO), took a gamble and lost big in a criminal case brought against it in the U.S., based on several years of regular price-fixing activities in the LCD-panel industry. A San Francisco jury found AUO guilty in March 2012, after an eight-week trial, but the court announced the sentence just this past week, ordering AUO to pay US$500 million and sentencing two of the company’s top-executives to three years in prison.

AUO was found guilty of participating in more than 60 meetings between 2001 and 2006, at which AUO and most of the other leading manufacturers of thin-film transistor (TFT) LCD-panels conspired to fix production levels and prices of TFT-LCD panels, which are used in computers, cell phones and other products.

It was a rare trial, as defendants in such cases almost always enter into plea bargains. In fact, AUO and its officers were the only defendants in the case who chose to go to trial, with seven other Asian manufacturers and 22 of their executives all pleading guilty, agreeing to pay combined fines of $890 million and accepting prison sentences ranging from six months to slightly over one year. Continue reading →

Trade Secret Litigation in Taiwan

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One of my former employers in Taiwan lost several employees to a competitor. Before leaving, the employees downloaded numerous files of sensitive financial information which they took to their new employer and used to try to steal our customers. We notified the authorities, the police launched a raid on the new employer, searched their computers, discovered the stolen data and another trade secrets battle had just begun.

Such cases are common; they’re also notoriously challenging. In Taiwan, the Trade Secrets Act prohibits the unlawful misappropriation, disclosure or use of trade secrets. Trade secrets are defined as business or technical information that is not known to the public, derives value from its secrecy, and is the subject of reasonable measures taken by its owner to protect its secrecy.

If trade secrets are unlawfully acquired, used or disclosed, the Act authorizes a civil suit for injunctive relief or damages. However, the basic measure for damages is plaintiff’s lost profits or defendant’s unlawful gains, both of which can be hard to prove. Additionally, Taiwan’s discovery procedures are practically non-existent, so it can be difficult proving knowledge and use of the secrets by the company receiving the secrets. Without that, all one has is a potential case against the individuals and no real proof of damages. Continue reading →

Protecting Trade Secrets

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As reported in the Wall Street Journal, notoriously secretive Apple Inc. was forced to divulge many diverse, and fascinating, trade secrets in its closely-watched litigation with Samsung (now in jury deliberation). Witnesses were compelled to testify concerning Apple’s development of the iPhone and iPad, its marketing budget and other sensitive matters, including – ironically – measures taken to protect the confidentiality of its trade secrets.

Unlike patents, a trade secret cannot gain protection through registration, but only through reasonable efforts to maintain its secrecy. For Apple, such efforts included “locking down” one floor in a building and installing cameras and keycard readers to ensure that Project Purple, their code name for development of the iPhone, would remain confidential. Team members were recruited only from within the company and were only told the nature of the project after they had joined the team.

While few of us deal with trade secrets of that magnitude, virtually every successful company has some commercially valuable information that derives its value from not being widely known. In a future blog post, we will address judicial, legislative and administrative issues relating to trade secrets, but this post concerns practical measures that should be considered to protect the confidentiality of trade secrets. Continue reading →

Taking Depositions in Asia for use in U.S. Litigation. Part II: Logistics.

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Due to the costs and difficulties of taking depositions outside the U.S., one should usually search for alternate solutions first. Try to limit the scope of required foreign evidence, obtain the evidence through other means, obtain it from the target’s parent company, subsidiaries, affiliates, employers or officers who are located in the U.S. or, if possible, convince the witnesses to fly to the U.S. to be deposed.

When such tactics won’t suffice, depositions can be taken in Asia, but one should prepare carefully to ensure the process will be successful and testimony will be admissible in court. If the depositions will take place in Japan, several months will be required just to reserve a room in the embassy or consulate and obtain required visas. Even in less rigid countries, it can be daunting lining up qualified interpreters, stenographers and making other critical arrangements, while ensuring compliance with applicable U.S., foreign and possibly international laws.

Consequently, prudent counsel will prepare well in advance, seeking stipulations from opposing counsel, informing the presiding U.S. judge of the plans, obtaining necessary orders, and retaining foreign counsel to assist with foreign laws and logistics. Continue reading →

Taking Depositions in Asia for use in U.S. Litigation. Part I: Legal Basis.

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Earlier this year, the judge in a US patent infringement lawsuit issued an Order requiring three Japanese witnesses to be deposed in Taiwan, rather than California or Japan, because taking the depositions in California would have been too inconvenient for the witnesses and taking them in Japan would have involved too many legal and procedural hurdles.

The witnesses argued the depositions should be held in Japan, because they lived and worked there (their Japanese employer was a defendant and they were being deposed as agents or officers) and US courts recognize a general right for witnesses to be deposed near their residence or place of business. Opposing counsel argued for California, because the onerous requirements concerning taking depositions in Japan allegedly offset any inconvenience of forcing the witnesses to travel. The judge settled on Taiwan as a compromise, “present[ing] minimal inconvenience to the witnesses and avoid[ing] the procedural and legal impediments to conducting the depositions in Japan.”

When taking depositions of foreign witnesses for use in US litigation, the process can be greatly simplified if the witnesses will agree to be voluntarily deposed in the US. Absent such consent, FRCP Rule 28 authorizes several procedures for initiating depositions in a foreign country. However, as explained below, each of those options has limitations and the process can be challenging. Continue reading →

10 Tips for Drafting Bullet-Proof Settlement Agreements

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Few contracts bring as much satisfaction as a well-crafted settlement agreement, for its ability to fully and finally resolve a dispute and bring lasting peace. To ensure that your settlement agreements meet those objectives, here are ten tips to consider.

1. Who is being released? The party being released (Releasee) will generally seek a release of not just itself but its subsidiaries, affiliates, officers, agents and so forth. Provided the Releasor agrees to such language, it should be included in the release provision (e.g., “Releasor hereby releases, waives and forever discharges…”), not in the first paragraph of the agreement after the name of the Releasee, as that would complicate matters, making the subsidiaries and affiliates parties to the agreement.

2. What is being released? To ensure broad coverage, the Releasee will usually want to include detailed recitals of the facts, claims and allegations leading up to the settlement, then state something like this: (all claims and liabilities relating to such matters shall be known as the “Dispute”). It’s then a simple matter to release all claims concerning the Dispute. Of course, the Releasor should make sure that any unsettled disputes are expressly excluded. Continue reading →