新日鉄技術流出 巨額和解金が戒めた不正行為

The Yomiuri Shimbun
POSCO ends up paying high price over alleged theft of technology info
新日鉄技術流出 巨額和解金が戒めた不正行為

How to prevent leaks of trade secrets, including proprietary technology information, to maintain international competitiveness is a major challenge for businesses.

A settlement has been reached over the damages lawsuits that Nippon Steel & Sumitomo Metal Corp. filed in Japan and overseas against major South Korean steelmaker POSCO and its subsidiaries over the alleged illicit acquisition of steel sheet production technology. The settlement called for POSCO to pay ¥30 billion.

According to the leading Japanese steelmaker, POSCO approached a former employee of Nippon Steel Corp., one of the two predecessors of Nippon Steel & Sumitomo Metal, and got him to leak the technology information illicitly in return for an enormous amount of money.

The theft allegedly targeted cutting-edge technology for producing electrical steel sheets. Steel sheets of this kind are used for manufacturing parts of such familiar products as transformers and mobile phones.

POSCO had insisted that it manufactured the products with its own technology, but finally agreed to pay a huge settlement, exceeding half its annual profits. This can be regarded as a de facto victory for Nippon Steel & Sumitomo Metal.

It is highly significant that the practice of illegally acquiring and exploiting the secret information of rival companies to earn profits has created the feeling both at home and abroad that those who do so end up paying a high price eventually.

The alleged theft came to light following the testimony of a former POSCO researcher arrested by South Korean investigative authorities on suspicion of leaking information to a Chinese steelmaker. The former researcher also revealed the information leak from Nippon Steel & Sumitomo Metal.

Behind-the-scenes industrial espionage targeted at Japanese firms has been increasing. According to the Economy, Trade and Industry Ministry, there were 540 cases of corporate information leaks in fiscal 2013, five times the figure for fiscal 2009.

Concern about brain drain

In a conspicuous trend, businesses of emerging economies are said to offer favorable terms of employment for Japanese engineers who have retired due to corporate restructuring or a mandatory age limit, and talk them into leaking information. Given the continued suspension of all nuclear power plants in Japan, concern has been increasing about a brain drain of nuclear-related engineers to China, South Korea and other countries.

Many Japanese companies are passive about taking legal action, as they view the leakage of trade secrets as their own shame. The revised Unfair Competition Prevention Law, which was enacted in July, makes it mandatory for accused companies to prove that the technology information in question was not acquired illicitly for production, a legal step to lessen the burden on plaintiff companies.

The maximum possible fine against businesses or individuals for illicit utilization of trade secrets has been raised to ¥1 billion.

To prevent leaks, it is essential to make the revised law function effectively. Businesses must also pay more attention to managing information.

Companies must conclude non-disclosure agreements with their employees and retirees requiring them not to leak trade secrets to rival firms. The number of employees with access to secret information must be limited as much as possible.

We hope information leakage will be prevented through such measures.

(From The Yomiuri Shimbun, Oct. 2, 2015)

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