Japan arrests ex-SanDisk employee in commercial espionage case
By Michael Hennigan, Finfacts founder and editor
Mar 20, 2014 - 9:02 AM

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Last Thursday Tokyo police arrested a man suspected of illegally providing a South Korean firm with research data from SanDisk Corp, a US high tech firm, on flash memory, that highlights the risks for high tech firms of staff attracted by the opportunity of an apparently easy bonanza .

Kyodo News reports that Yoshitaka Sugita, 52, was an engineer at SanDisk Corp., a semiconductor maker that had formed an alliance with Toshiba on flash memory production, the police said, adding that he had access to the data.

He allegedly acquired data on NAND flash memories used in such products as smartphones around July 2008, duplicated it and handed it over to SK Hynix Inc. after he began working for the South Korean chip giant, the police said. The man later left Hynix.

The police acted after Toshiba and SanDisk filed a criminal complaint.

In 2004, Toshiba filed a lawsuit against the Japanese unit of what was then Hynix, seeking damages for violations of flash memory patents and an injunction against the sale of the offending products.

In 2006, the Tokyo District Court ordered Hynix to discontinue sales of the products in violation and to pay ¥7.8 million in damages.

“I got a whole lot of money, and I won’t have to work for the rest of my life,” Yoshitaka Sugita told his acquaintances while working for the South Korean company, according to Japan News.

Also on Thursday, SanDisk filed a claim for damages against  SK Hynix in a court in Santa Clara, California. Toshiba is also suing for damages of about ¥100bn ($986m).

“SanDisk strongly believes in the value of IP, and takes protecting trade secrets seriously,” said Judy Bruner, executive vice president, administration, and chief financial officer at SanDisk. “We are working diligently with the authorities as well as our partner on these matters and are aggressively pursuing all legal remedies available to us.”

The Asahi Shimbun newspaper said in an editorial on Wednesday:

If indeed a corporate climate exists that spurs businesses to throw ethics out the window and obtain whatever technology money can buy, then the Japanese government and the private sector need to join forces to correct the situation.

SK Hynix is in partnership with Toshiba in the development of next-generation memory technology. The company needs to explain its decision to hire Sugita at high remuneration and use the data obtained under "irregular" circumstances.

One of the causes of the decline of Japan's manufacturing industry is that Japanese-developed technologies have been shared with companies in South Korea and China by Japanese employees who left or switched jobs.

But it is extremely rare for this sort of technology drain to come under criminal investigation, and Toshiba's case is obviously only the tip of the iceberg."

In related news, Reuters reports today that a former employee of Microsoft is facing criminal charges after he allegedly passed trade secrets to a blogger in France, U.S. court documents showed.
 Russian national Alex Kibkalo, a former Microsoft employee in Lebanon and Russia, admitted to Microsoft investigators that he provided confidential company documents and information to the blogger, documents from a Seattle federal court showed.

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