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Breaking: Samsung Manager Leaked Existence of iPad

Photo Source: edenpictures on flickr

We have not addressed it too much on this blog yet, but trade secrets are always a litigious area in intellectual property.

Now comes word out of a trial involving insider trading that someone at Samsung (which was in Apple’s iPad supply chain) leaked the existence of the iPad before it was known.

In a scene that would be befitting of a scene from of a movie, as reported by Bloomberg Businessweek:

An ex-Samsung Electronics Co. manager, testifying at the insider-trader trial of Primary Global Research LLC executive James Fleishman, told jurors he disclosed confidential shipping data for Apple Inc. iPad components.

The ex-Samsung Electronics Co. manager was granted immunity from prosecution, but was fired for his disclosures in June 2011.  The manager continued to leak information to PGR until the FBI caught wind.  From the article:

After he received a promotion in February 2010, Hwang notified PGR executives that he wanted to stop working for them. He said Primary Global officials told him they would allow him to work anonymously and said they also offered to raise his consultation fee from $200 an hour to $350.

Hwang agreed and worked for PGR until August 2010. He said he was approached by Federal Bureau of Investigation agents in October when they came to his home and asked him about his work with PGR. He said he didn’t initially tell agents the truth about his actions.

Hwang said he was fired by Samsung in June 2011 and said he hasn’t been charged with any crimes. Under Rakoff’s order, Hwang’s testimony can’t be used against him and he can only be prosecuted if he commits perjury. His testimony continues today.

Keeping trade secrets secret is not always possible.  Apple which is notoriously tight-lipped would have difficulty (as in this case) controlling the actions of their suppliers’ employees.  This difficulty should not stop a company from making every effort to protect their trade secrets through properly executed agreements, training, and in extreme cases, monitoring of e-mail, etc.

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