Safe to Take Trade Secrets to Hong Kong? Micron Has No Choice
Safe to Take Trade Secrets to Hong Kong? Micron Has No Choice
(Bloomberg) -- A U.S. criminal prosecution against China’s aspiring state-owned memory manufacturer took a controversial step forward when a judge ruled that the company can review the trade secrets it allegedly stole from Micron Technology Inc. in the one place the Idaho chipmaker said was too dangerous: Hong Kong.
The case against Fujian Jinhua Integrated Circuit Co. and Taiwan-based United Microelectronics Corp., along with three Taiwanese nationals, is the first prosecution under the Trump administration’s high-profile China Initiative. The case has suffered various delays, the latest sticking point being whether lawyers for the companies would be permitted to review sensitive files in Hong Kong.
Micron fiercely objected to the city as a place where its information could be safely shared, alongside prosecutors who argued in a court filing that “there is no meaningful difference between the information-security risks in Hong Kong” and the People’s Republic of China.
“I don’t find that Hong Kong is in the same category as mainland China,” U.S. District Court Judge Maxine Chesney said Wednesday during a hearing in San Francisco. “Hong Kong is in a different situation,” she said, adding, “We have two very reputable law firms here that have some credibility, historically at least, of standing by their word.”
Chesney had to weigh the protection of Micron’s secrets against the defendants’ right to see the information they’re charged with stealing. Lawyers for Fujian Jinhua and UMC argued that colleagues at the Hong Kong offices of California-based law firms Morrison and Foerster and Latham & Watkins needed to regularly access the information to mount their defense.
The two sides had hammered out an agreement under which the information could be shared in Singapore, Japan and Taiwan, though Micron and prosecutors dug in their heels about adding Hong Kong to the list. Chinese intelligence services are “known to surreptitiously copy electronic devices or other storage media, even when those devices are locked in a safe or encrypted,” according to the filing.
“Micron has a fraught relationship with the government in China arising out of the circumstances of this case,” prosecutor John Hemann told Chesney. Micron lawyer Neal J. Stephens said a 2017 civil suit the company filed against Jinhua and UMC adds to the tension.
If a heat map were used to illustrate locations where trade secrets are in jeopardy of being siphoned by China, “Hong Kong would be off the charts,” Stephens told Chesney.
“We should not put Hong Kong on the table,” given the compromise locations Micron agreed to, Stephens said. “There’s a lot on the line for the victim that sits before you today,” he said.
Stephens declined to comment after the judge’s ruling.
The case is U.S v. United Microelectronics Corp., 18-cr-00465, U.S. District Court, Northern District of California (San Francisco).
To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Blumberg, Joe Schneider
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