Case Analysis: Taiwan Semiconductor Manufacturing Co. V. Semiconductor Manufacturing International Corporation Essay

Every trade act can cause many different issues. As a result, every company needs laws to protect their right when they are doing with other. In addition, every country has different law for these business acts. People need to deeply understand the causes and consequences of these problems, in order to avoid breaking the law during their business act. Here I’m going to analysis a case happened in the US District Court of Northern California.
In December 2003, A Taiwan Semiconductor Manufacturing Co.

’s (TSMC) terminated employee, a suspected who transferred the wafer processing of confidential information to Semiconductor Manufacturing International Corporation (SMIC). SMIC was registered to conduct business in California; also TSMC had a subsidiary in the state. As a result, TSMC was sued SMIC in U.S. court because it was violated the trade secrets. In this pleading, TSMC was sued SMIC because SMIC was violated trade secrets’ improperly by the job-hopping employee. Also, TSMC was filed for an injunction sanction and indemnification (Mcguiness, 2008).

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First of all, TSMC and SMIC were resolved those action in 2005 in a comprehensive settlement agreement. In this settlement agreement, SMIC should indemnify one hundred seventy-five million U.S. dollars to TSMC. Secondly, TSMC did not grant the right to use trade secrets for SMIC. TSMC agree with no longer prosecute about SMIC improper use of trade secrets. Then TSMC will revoke this litigation in the U.S. federal courts, the U.S. District Court in California, the United States International Trade Commission and the Hsinchu District Court. TSMC also remains a right of litigation if TSMC breach of contract (Clendenin, 2004). Intellectual property rights

Taiwan government has developed related laws in order to protect the country’s competitiveness in the semiconductor industry. But the government law enforcement, some unscrupulous engineer and the company illegal to sell out the future of the semiconductor industry in Taiwan. Infringement of intellectual property rights will have to pay a considerable price. However, but the concept of intellectual property rights protection in Taiwan is very poor, some Taiwan businessmen and technicians to exploit this vulnerability, such as steal trade secrets and counterfeit. A professional employee should have considerable professional ethics, also should respect for the intellectual property, rather than relying on their professional competence to earn improper money (World Trade Organization, 2013). In this case, the job-hopping employee stole TSMC’s 0.18-micron process design patent and sold to the SMIC. Consequently, under the court of the United States’ decision, SMIC should pay one hundred seventy-five million dollar to TSMC in February 2005(Clendenin, 2004). Transnational flow of technical personnel

In this case, also is the transnational flow of technical personnel causes this adverse consequence. Because the transnational act are very frequently; as a result, some technology or knowledge will use in other companies or countries. If these technology or knowledge are not relate on patents or trade secrets, it will be not affect much. On the other hand, if these are related about the key to technologies or knowledge, severe cases can affect a country’s competitiveness. In SMIC infringement this case, it just gave a good chance to the Taiwan government and any manufactures to thinking about how to strengthen it. The manufacturer’s precautions

Any manufacturer not only should focus on the loyalty of their employee, but also have to focus on how to protect their intellectual property rights. When get any new information, technologies or knowledge, which company should know about how these come from. Therefore, that company will not infringed the law then cause a lawsuit. This is very important for every company. If a company ignore this then cause their infringement, it can result to bankruptcy. So, every company should attach importance to it.

Taiwan’s intellectual property rights system is become more and more complete. Infringement of intellectual property rights must to pay a heavy price for it. However, intellectual property rights are relative lack in China. In recent years, Taiwan businessmen are keening on developing China’s market. In China, intellectual property protection is not perfect. As a result, when the personnel and technical develop in to China, is very easy to cause patent infringement contentious. In this case, the cognitive of infringement litigation is inevitable. Respect for intellectual property right is the most basic rule for every company. In this suit, the worst situation is SMIC should face their stock cannot go public in the United States’ market or SMIC should exit the semiconductor market. To solve this problem is very hard. It is impossible to demand China immediately improve the protection of intellectual property rights. Consequently, every manufacturer should attach importance to this case, also should follow TSMC’s approached to protect their interests.

Clendenin, M. (2004). Analysis: background on TSMC, SMIC lawsuit. EE Times. Retrieved March 08, 2013, from 4120176/-b-Analysis–b-background-on-TSMC-SMIC-law

Mcguiness, P.J. (2008). TSMC NORTH AMERICA v. SEMICONDUCTOR MFG. INTERN. CORP. Leagle. Retrieved March 08, 2013, from World Trade Organization, (2013) What are intellectual property rights? World Trade Organization. Retrieved March 08, 2013, from

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