Taiwanese LED epiwafer manufacturer Genesis Photonics Inc. (GPI) has filed a lawsuit against its former Chief Technology Officer Yun-Li Lee for stealing and selling trade secrets to Chinese competitors, and applying acquired GPI technology in his startup company PlayNitride.

GPI plans to file the lawsuit after compiling all related data and evidence. Taiwan’s Investigation Bureau under the Ministry of Justice searched the suspects office, and confiscated related evidence on Jan. 25, 2016. The whole case is being investigated and processed under the jurisdiction of Tainan District Prosecutors Office in Southern Taiwan.

Genesis Photonics Inc. (GPI) booth at a lighting show. (LEDinside)

A senior GPI manager, who declined to be named told LEDinside, engineers stealing research results and business secrets from former employees has become a prevalent problem in Taiwan’s technology industry. Some engineers will take all of their former employers business secrets and research results after being recruited by competitors on the promise of better benefits and a bigger paycheck. These former employees might even found their own enterprise, and use similar technology to develop nearly identical products to undermine their previous employer benefits.

GPI emphasized the company’s LED epiwafer, flip chip, and CSP manufacturing process was the result of years of R&D, that involved allocation of large financial and human resources investments. The company was shocked to find employees that left the company had been using its chip technology illegally or had disclosed confidential information to third parties including Taiwanese and Chinese LED companies. Hence, the company decided to take legal action, and has filed plaintiffs in both civic and criminal courts.

The company beseeched competitors to stop stealing trade secrets, and creating unfair industry competition. “Some LED companies in the industry exploited our former employees greed to plagiarize and steal business secrets”, said the GPI manager. “Not only do these actions seriously infringe shareholders right, it also is a grave threat to Taiwan’s LED industry competitiveness and survival.” Taiwanese manufacturers have invested massive financial resources to develop their own LED chip technology, but have been unable to accumulate technology capital due to these actions.

The whole case is being investigated by Taiwan’s Investigation Bureau and its branches in central and southern parts of the country including Tainan, Kaohsiung and central Taiwan. Other government agencies involved in the case include computer forensics team, a research team from National Chiao Tung University to probe the structure of the product in question, and provide a detailed investigation report. GPI hopes the case can assist Taiwan’s technology industry to develop better protection measures.

The case which was widely reported in Taiwan’s media this week happened after GPI observed in late 2014 that San’an Opto’s LED chip design had become increasingly similar to their own, studies from NCTU also confirmed the two companies sapphire substrate design was exactly the same. GPI then suspected a former employee leaked business secrets to rivals including Chinese LED chip maker San’an Opto and Taiwanese competitor PlayNitride, which is estimated to have caused the company NT $1.3 billion (US $38.68 million) in losses.

PlayNitride, a UV LED specialist, was registered and founded in Cayman Islands in 2014. The company’s major shareholders include San’an Opto, and FOREPI, which has been merged with Epistar in late 2014. San’an Opto, a major shareholder of FOREPI’s before its merge with Epistar, requested the company to invest and acquire 20% stake in PlayNitride. After Taiwanese LED chip maker Epistar absorbed FOREPI in 2014, it has indirectly held shares in PlayNitride, but is not involved in the recent GPI lawsuit against its former employee.

GPI is not alone in its struggle with leaked business secrets. Other Taiwanese companies, such as Epistar are also in the same boat. Many employees of Taiwanese LED chip maker Epistar have been headhunted by Chinese manufacturers, and despite taking legal action it has been difficult for them to reach any meaningful results in cross-strait lawsuits. Although, GPI has initiated a lawsuit against its former employee and competitors, the industry is still observing following developments.

(Author: Ivan Lin, Head of Content Development Division, TrendForcehttp:// Translator and Editor: Judy Lin, Chief Editor, LEDinside)