Brief#1 Foxconn Case

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Brief #1 Foxconn vs BYD (A): Commercial Espionage or Learning by Hiring? The key legal and ethical issues of the Foxconn case are the misappropriation of trade secret and using unethical competition to gain technology and expertise. Firstly, the fact clearly identifies that BYD had misappropriated Foxconn’s trade secret when a Foxconn’s senior engineer, Wang Wei, sent computer files of trade secrets to BYD and shared Foxconn’s confidential information to BYD and allowing BYD to benefit from the information. Wang has breached the fiduciary duty entrusted to him and also breached the confidentiality agreement he had with Foxconn. Being a Foxconn’s senior engineer, Wang has an implied fiduciary duty to act honestly in the service of Foxconn including not to profit himself at the expense of Foxconn and not to disclose confidential information to competitors unless with the employer’s knowledge and consent. Under common law, key employees and skilled workers owe a duty of loyalty to the employer regardless of whether there are restrictive covenants. BYD is also vicariously liable for the trade secret infringement as it has the right and ability to supervise the infringing activity and it also has a direct financial interest in that activity. In fact, BYD has been constantly and intentionally stealing trade secret from Foxconn through employee networks. Such deliberate act of theft gives rise to legal and ethical issues that can be prosecuted under criminal offence. Secondly, BYD has used unethical learning by hiring recruitment strategy to solicit Foxconn’s key employees to work for BYD thereby gaining expertise and know-how to compete successfully in the industry. These key employees can be held liable to Foxconn for breach of fiduciary duty and fraud and BYD’s unethical actions of inducing those key employees to violate their confidentiality agreement can give rise to lawsuits of tortious interference with contract. However, because the Chinese legal and political...
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