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ASML: Intellectual property theft, not Chinese espionage

In response to a story published by Dutch financial newspaper Financieele Dagblad this morning, Netherlands-based ASML has issued a press release disagreeing with the implication that it has been victim of “Chinese espionage,” as stated in the story.

The story described the results of a court case in the United States, which ASML initiated in 2016 and then won two years later. In that jury case, a company called XTAL was found to have misappropriated ASML’s confidential and proprietary information and trade secrets in 2015. But Chinese espionage, it was not, according to today’s statement. ASML President and CEO Peter Wennink said, “The suggestion that we were somehow victim of a national conspiracy is wrong. The facts of the matter are that we were robbed by a handful of our own employees based in Silicon Valley, who had broken the law to enrich themselves. All of this occurred several years ago. We found this out by ourselves and immediately sought legal action in public court in 2016. This was reported on in several publications after our victory in November 2018.” The press release explained that ASML employees, with various nationalities, stole “a specific small part of ASML’s broad product and services portfolio” in the form of software for mask optimization, with the goal of creating a competing product that it planned to then sell to an existing ASML customer in South Korea. The funding for this company XTAL originated from South Korea and China. The damage award by the Santa Clara Superior Court was USD 223 million, which was based on “unjust enrichment” in connection with lost sales opportunities. The press release also stated that “it is unclear to what extent these damages can be collected from the now bankrupt company XTAL.” ASML expressed regret that it had fallen victim to corporate theft and acted immediately once it was made aware. Additionally, the company said, it has significantly expanded efforts to protect its assets even further since the incident. “We resent any suggestion that this event should have any implication for ASML conducting business in China. Some of the individuals happened to be Chinese nationals, but individuals from other nations were also involved. We do protect our proprietary knowledge carefully and are very sensitive to information security. We believe we can serve all our customers, including our Chinese customers, and help them build their businesses. We are encouraged by the recent constructive talks and agreements between the European Union and China that China will step up its efforts to respect and protect corporate intellectual property of non-Chinese companies, including effective enforcement actions. We will be even more encouraged when we see these materialize in Chinese law and jurisprudence,” Wennink said.
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November 12 2019 7:31 am V14.7.10-1