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Trade Secrets, Economic Espionage and Other Perils of Doing Business with China


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  • 2. Unique Challenges…• United States: the most litigious and regulated country in the world. • Civil Litigation • Criminal Prosecutions• Historical and cultural bias against Chinese Americans • Dr. Wen Ho Lee• Civil and Criminal Litigation Concerns • Economic Espionage Act and Trade Secrets • Foreign Investments in the United States • Foreign Corrupt Practices Act • Securities Litigation • National Security• Preventative Maintenance
  • 3. United States: Most Litigious…
  • 4. Civil LitigationUnpredictable and Enormous Jury Verdicts 4
  • 5. Civil LitigationUnpredictable and Enormous Jury Verdicts
  • 6. Criminal Prosecutions 6
  • 7. Criminal Prosecutions 7
  • 8. Criminal Prosecutions 8
  • 9. Criminal Prosecutions 9
  • 10. Historical And Cultural Bias Against Chinese Americans 10
  • 11. 11
  • 12. Chinese American Exclusion Act of1882 “It shall not be Lawful for any Chinese labor to come…to remain within the United States.” 12
  • 13. The Red Scare Senator Joseph McCarthy 13
  • 14. 14
  • 15. 15
  • 16. DOE Director ofCounterintelligence Secretary of Energy
  • 17. Dr. Wen Ho Lee
  • 18. 18
  • 19. Judge Parker’s Apology
  • 20. Judge Parker’s Apology
  • 21. Judge Parker’s Apology
  • 22. Judge Parker’s Apology
  • 23. H.R. 683
  • 24. Civil and Criminal Litigation Concerns 24
  • 27. What is a Trade Secret?• Information• Has independent economic value• Not generally known – To the public – To others who can obtain economic value from its disclosure or use• Kept secret 27
  • 28. Trade Secrets – What and Where Are They? Trade Secrets are: Trade Secrets are found in: • Formula • R & D documentation • Pattern • Lab notebooks • Compilation • Computer files • Databases • Program • Drawings • Device • Rolodexes • Method • Whiteboards • Technique • Email • Process • In employees’ heads • Customer List • Other
  • 29. Secrecy EffortsPhysical Facility Documents• Security • Marked confidential• Badges • Electronic sensors• Limited access to site • Limit copies• Receptionist • Passwords• Lobby • Checkout procedure• Escorts • Shred• Photo ID• Need to know access
  • 30. Proof of Misappropriation vs. Detecting Misappropriation Proof Detection • Improper acquisition, • ―Dummy names‖ on disclosure or use; customer lists ; • Often circumstantial • Strategic typos in documents or source evidence; code ; • Place stolen materials in • Monitoring computer defendants’ hands; systems; • Experts may be necessary ; • Archiving hard drives and not reassigning computers; 30
  • 31. ECONOMIC ESPIONAGE ACTof 1996 It is a federal crime to steal trade secrets • For the benefit of a foreign government (Economic Espionage, 18 U.S.C. 1831) or • For the benefit for anyone other than the owner of the trade secret (Commercial Theft of Trade Secrets, 18 U.S.C. 1832 et seq.) Reflects growing corporate value of intellectual assets and focus on international IP enforcement New DOJ Intellectual Property Task Force 31
  • 32. Prohibited Conduct• Under 18 U.S.C. § 1832 et seq., it is a crime to 1. CONVERT A TRADE SECRET relating to a product produced for or placed in interstate or foreign commerce 2. with CRIMINAL INTENT 3. for the ECONOMIC BENEFIT of someone other than the owner of the trade secret 4. or to ATTEMPT OR CONSPIRE to do so• Government must prove each element beyond a reasonable doubt• The statute of limitations32is five years
  • 33. Penalties• Fines • $250,000 - individual • $5,000,000 - corporation • $15,000,000 – if for the benefit of foreign government• Imprisonment in federal custody • Maximum 10 years • Maximum 15 years – if for the benefit of foreign government• Forfeiture of any property used in or proceeds derived from the theft 33
  • 35. Committee on Foreign Investment in the United States (“CFIUS”)• Initially Formed in 1975 by Executive Order 11858 (May 7, 1975) • Motivated by increasing concerns about OPEC investments in U.S. Companies • Reviewed investments in the US that might have major implications for U.S. ―National Interests‖• 1993 Byrd Amendment required CFIUS to investigate all transactions where acquirer is controlled by or acting on behalf of a foreign government• Foreign Investment and National Security Act of 2007 (―FINSA‖) • Motivated by political and popular uproar over two proposed transactions: • 2005 China National Offshore Oil Corporation’s (―CNOOC‖) proposed purchase of Unocal, and • 2006 Dubai Ports’ proposed acquisition of Peninsular & Oriental Steam Navigation Company. 35
  • 36. Committee on Foreign Investment in the United States• Policy Goals: National Security v. Foreign Investment • To ensure national security while promoting foreign investment. Executive Order 13456 (January 23, 2008)• CFIUS reviews transactions by or with any foreign person, if the transaction could result in control of U.S. business by a foreign person • But only where national security is implicated 36
  • 37. Committee on Foreign Investment in the United States• CFIUS reviews are limited to national security considerations (Guidance concerning the National Security Review Conducted by [CFIUS], 73 Fed. Reg. 74,567 (December 8, 2008))• For Example: • Export Issues – International Traffic in Arms Regulations (―ITAR‖) – Export Administration Regulations (―EAR‖) • Classified Issues: – National Industrial Security Program Operations Manual (―NISPOM‖) 37
  • 38. CFIUS Covered Transactions• Merger• Acquisition• Credit agreement• Lease• Any transaction that results or could result in foreign ―control‖ of any U.S. business, part of a U.S. business, or U.S. assets by a foreign person, including, but not limited to: • Investment • Joint Venture • Asset Purchase • Includes transactions when foreign persons convey U.S. business or assets to another foreign person. (§ 721(a)(3); 31 C.F.R. § 800.207, 800.301) 38
  • 39. CFIUS Covered Transactions• NOT ―Covered Transactions‖ • Stock splits (if it does not result in a change in control) • Pro rata stock dividend (if it does not result in achange of control) • Transactions resulting in foreign person holding 10% or less of a U.S. owned business and if only for investment purposes – Objective test – Narrowly construed – Look at any rights to directorship, voting rights agreements and comparable factors • Acquisition of part of an entity (or asset) that does not constitute a U.S. business • Acquisition of securities by a securities underwriter in the ―ordinary course‖ of business • Acquisition pursuant to insurance contract if made in the ‖ordinary course‖ of business 39
  • 40. CFIUS Covered Transactions Industries of interest to CFIUS include:• Defense • Information technology• Smart Grid • Telecommunications• Munitions manufacturing • Energy• Aerospace • Natural resources• Software • Industrial products• Radar • Structural engineering 40
  • 41. Factors Considered• Potential effects of the transaction: • On the domestic production needed for projected national defense requirements • On the capability and capacity of domestic industries to meet national defense requirements (i.e., ready availability of human resources, products, technology, materials, and other supplies and services) • Of a foreign person’s control of domestic industries and commercial activity on the capability and capacity of the United States to meet its national security requirements • On U.S. international technological leadership in areas affecting U.S. national security 41
  • 42. Factors Considered• Potential effects of the transaction: • On U.S. critical technologies • On U.S. emerging technologies • On U.S. disruptive technologies • On the long term projection of U.S. requirements for sources of energy and other critical resources • On the sales of military goods, equipment, or technology to countries that present concerns related to terrorism; missile proliferation; chemical biological chemical, biological, or nuclear weapons proliferation; or regional military threats 42
  • 43. Factors Considered• CFIUS will also consider the following: • The potential that the transaction presents for transshipment or diversion of technologies with military applications, including the relevant purchaser country’s export control system • Whether the transaction could result in the control of a U.S. business by a foreign government or by an entity controlled by or acting on behalf of a foreign government • The relevant foreign country’s record of adherence to nonproliferation control regimes and record of cooperating with U.S. counterterrorism efforts 43
  • 44. Mitigation• CFIUS will enter into mitigation agreements to resolve national security issues• Before mitigation can occur, CFIUS must prepare a written analysis that: • Identifies the national security risk(s) • Sets forth measures believed necessary to address the risk• Risk mitigation by CFIUS is appropriate only if laws other than FINSA/DPA do not adequately address the national security concerns: • i.e., ITAR, EAR, NISPOM 44
  • 45. Mitigation• Examples of Mitigation • Limitations on foreign ownership, control and influence (―FOCI‖) – Special security agreements – Proxy agreement/board – Limitations on voting rights • Divestiture of part of business assets – Sell specific assets – Compulsory IP licenses – Limits on resale – March-in rights 45
  • 46. Benefits• Once CFIUS ―clears‖ your transaction (whether ―as is‖ or as mitigated): • Safe harbor applies • Committee can only reopen the review if: – Material omissions or misstatements were included in the original submission (excludes, for example, minor inaccuracies as to financial or commercial factors not bearing on national security) – Breach of a mitigation agreement (generally subject to a materiality standard) 46
  • 49. SEC Enforcement Division:New Investigative Units美国证交会执法处:新的调查部门• Market Abuse (includes insider trading) 市场操纵(包括内部人交易)• Asset Management (hedge funds) 资产管理(对冲基金)• FCPA 美国《反海外腐败法》• Structured and New Products 结构化及新颖产品• Municipal and Public Pension 市政和社会养老保险 49
  • 50. Expanded SEC Enforcement Powers美国证交会被赋予更大的执法权力 Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) 《多德-弗兰克华尔街改革和消费者保护法》(2010年) • Extraterritorial jurisdiction in SEC enforcement actions for transactions with either cause or effect in the U.S. 美国证交会被赋予境外执法权以处理那些缘起于美国, 或者会影响到美国境内利益的交易, • Ability of SEC to broadly share information with foreign, federal, and state government regulators without waiving privilege 美国证交会在不放弃特权的情况下,能够与外国、联 邦和州政府监管部门广泛分享信息 50
  • 51. Increased Scrutiny of U.S.-Listed Chinese Companies 对中国在美上市公司日趋严厉的监管• February 22, 2012 SEC press release: ―SEC Charges China-Based Executives With Securities Fraud‖ 2012年2月22日,美国证交会新闻稿称:―美国证交会指控 中国(在美)公司高管人员犯有证券欺诈行为‖ • ―the SEC has revoked the securities registration of at least a dozen U.S. issuers based in the People’s Republic of China and instituted administrative proceedings to determine whether to suspend or revoke the registrations of 27 more issuers‖ “美国证交会撤销了至少十几家总部位于中华人民共和 国在美上市公司的证券登记,并启动了行政程序,以 确定是否需要中止或撤销另外27家上市公司的登记” 51
  • 53. Sources of SEC Investigations 美国证交会调查的来源• Market surveillance—use of technology to analyze trading activity 市场监管 — 运用技术手段分析交易行为• Other SEC divisions 美国证交会的其他部门• Other government agencies 其他政府机构• Self-Regulatory Organizations (e.g., FINRA) 自律组织(例如美国金融业监管会)• Self-reporting by companies 公司自行报告• Complaints from the public 公众投诉• Whistleblowers 举报人• Office of Market Intelligence: coordinates complaints, tips, and referrals 市场情报部:协调投诉、消息和举报等来源的信息 53
  • 54. SEC Whistleblower Program美国证交会举报人计划• Whistleblowers who provide the SEC with ―original information‖ leading to sanctions over $1 million USD may be awarded 10-30% of sanctions collected 如果违规人最终被课以超出一百万美元的罚金,向美国证 交会提供―原始信息‖的举报人可望获得所处罚金的10-30%。• Whistleblowers may act on their own or anonymously through legal counsel 举报人可自行举报,或通过律师匿名举报• Plaintiff law firms are actively seeking whistleblower cases 原告方委托的律所十分积极地搜寻举报人案件 54
  • 55. SEC Whistleblower Program 美国证交会举报人计划(续)• FY 2011 Annual Report on the Whistleblower Program: covers only seven weeks of tip data (rules became effective August 12, 2011) 2011财年举报人计划年度报告:只含有七周的消息内容(规则于 2011年8月12日生效)• Most common complaint categories: market manipulation, corporate disclosures and financial statements, and offering fraud 最常见的投诉类别是:市场操纵、公司信息披露和财务报表,及募 股欺诈• Among tips from outside the U.S., the highest percentage (over 30%) came from China (10 tips) 从美国之外传回的消息中,来自中国(10条消息)的线索占最大比 例(30%以上)。 report-2011.pdf 55
  • 57. SEC Investigations 美国证交会调查• Preliminary Investigation (―informal inquiry,‖ ―information request‖) 初步调查(―非正式询问‖、―信息请求‖) • Voluntary cooperation 自愿配合• Formal Investigation 正式调查 • Subpoena power; compulsory process 传讯权;强制性程序• Non-public (confidential) 非公开(保密)• Fact-finding 事实调查• Wells Notice process: when the SEC determines that it may bring a civil enforcement action 韦尔斯通知程序:在美国证交会认为该程序可能导致民事执法行动时采取 57
  • 58. SEC Enforcement Litigation美国证交会执法诉讼• Federal court 联邦法院• Administrative Proceedings 行政程序 58
  • 59. Coordination Between SEC Enforcement and U.S.Criminal Authorities美国证交会执法与美国刑事执法当局之间的协调• Director of SEC Enforcement, Robert Khuzami, is former head of Securities and Commodities Fraud Task Force at U.S. Attorney’s Office in New York 美国证交会执法处主任罗伯特·柯扎米曾担任美国联 邦检察署纽约分署反证券及商品欺诈行动组的负责人• Numerous Enforcement Senior Staff are former criminal prosecutors 无数的资深执法官员均曾担任过刑事检控官 59
  • 60. Coordination Between SEC Enforcement and U.S.Criminal Authorities美国证交会执法当局与美国刑事执法当局之间的协调(续)• Enforcement works more closely with criminal authorities to gather evidence than in the past 执法部门更为紧密地与刑事执法部门合作收集证据• Wiretaps used more extensively in white collar investigations by the U.S. Department of Justice— information shared with SEC 美国司法部针对白领犯罪的调查中广泛使用录音技术 — 此信息与美国证交会分享• Parallel criminal investigation can result in multiple, overlapping subpoenas 平行展开的刑事调查可能导致多重、重叠性传讯令 60
  • 61. Parallel Securities Litigation and Gov’tInvestigations: Strategic Challenges平行展开的证券诉讼和政府调查:战略性挑战• The means of protecting the company in securities litigation vs. an investigation can be conflicting 证券诉讼中使用的保护公司的方法与执法行动中需采 取的保护措施可能存在冲突• Moreover, the company’s response to the investigation may impact its defense of the litigation (and vice versa) 况且,公司对调查的回应可能会对其应诉产生影响 (反之亦然) 61
  • 62. Parallel Securities Litigation and Gov’tInvestigations: Strategic Challenges平行展开的证券诉讼和政府调查:战略性挑战• For example, it is often in the company’s best interests to cooperate with the investigation and voluntarily provide confidential documents, witness testimony, and (sometimes) privileged information to government authorities 例如,在调查案中,配合调查及主动向政府当局提供保密文件、 证人陈词,有时甚至是受到特权保护的信息等做法常常最符合 公司利益。• Cooperation shows that the company has ―nothing to hide‖ and can help persuade the government not to pursue action (or to seek a reduced penalty) 公司给予配合,表明公司―并无东西可隐藏‖,这样可以让政府信 服无须提起诉讼(或获得处罚宽免) • Filip Memorandum; SEC Enforcement Manual 菲利普备忘录;美国证交会执法手册 62
  • 63. Parallel Securities Litigation and Gov’tInvestigations: Strategic Challenges平行展开的证券诉讼和政府调查:战略性挑战• By contrast, in the securities litigation, it is often in the company’s best interests to defend aggressively against the plaintiff lawyers’ demands for similar documents and testimony 与之形成鲜明对照的是,在证券诉讼中,最符合公司利益 的做法针对原告律师索取提供类似文件和证词的请求予以 积极抗辩。• Otherwise, the plaintiff may seek to use the information as the basis for making additional unfounded allegations 否则,原告可能会设法使用所述信息提出更多尚无依据的 指控。 63
  • 64. Parallel Securities Litigation and Gov’tInvestigations: Strategic Challenges平行展开的证券诉讼和政府调查:战略性挑战• The plaintiff lawyers will often demand copies of all documents and information that the company provides to government authorities 原告律师经常会要求公司提交其曾经提供给政府部门的所有文 件和信息的复印件• And, U.S. courts have almost universally rejected the ―selective waiver doctrine‖ 并且,美国法院几乎会一概驳回―选择性弃权原则‖• Therefore, when responding to government investigations, the company must balance the potential collateral impact on parallel securities litigation 因此,在回应政府调查时,公司必须采取平衡策略,考虑到所 提供的文件对平行证券诉讼的潜在附带影响 64
  • 65. Wider Range of Potential Penalties From U.S.Government Enforcement Actions美国政府执法行动可能导致的种种处罚(Partial List)(不完全清单)• Trading Suspension • Cease and Desist Order 交易中止 制止令• Revoke Securities • Officer and Director Bar Registration 禁止相关人士担任高管和董事 撤销证券登记 • Independent Monitor• Asset Freeze 指派独立监管人 资产冻结 • Criminal Penalties (including• Disgorgement imprisonment) 退出不当所得 刑事处罚(包括被判入狱)• Monetary Penalty (Fine) 金钱处罚(罚款) 65
  • 67. Increased Scrutiny of U.S.-Listed Chinese Companies对中国在美上市公司日趋严厉的监管 67
  • 68. Increased Scrutiny of U.S.-Listed Chinese Companies对中国在美上市公司日趋严厉的监管 68
  • 69. Increased Scrutiny of U.S.-Listed Chinese Companies对中国在美上市公司日趋严厉的监管 69
  • 70. Increased Scrutiny of U.S.-Listed Chinese Companies对中国在美上市公司日趋严厉的监管 70
  • 72. What is the FCPA?Anti-bribery provision: Prohibits corrupt payments to foreign government officials for the purpose of obtaining or retaining business 反贿赂:将出于影响官方决定以获得商业利益之目的而向世界仸何地方的外国官 员行赂的行为认定为犯罪Accounting provision: Requires companies with publicly traded stock in the US (registered with the SEC) to meet certain record keeping and internal control standards 会计:要求在美国公开发行股票(在美国证券交易委员会注册)的公司符合特定 记录保存和内控标准• The FCPA applies to US companies and their overseas employees and agents• It is extremely broad and harsh; in recent years it has become a major concern for US companies operating overseas, especially in China美国反海外腐败法是一项适用于美国境外公司及雇员的美国法律美国反海外腐败法禁止贿赂外国政府官员的行为美国反海外腐败法涉及的面极广且十分严格,在最近五至七年中成为在海外经营–尤其在中国经 营的美国(及其它)公司的重大法律问题 72
  • 73. Severe Punishments for Violations / 原因:对违法行为处罚严厉• Company Liability: Substantial Fines / 公司责仸:巨额罚款• Individual Liability: Fines and Imprisonment / 个人责仸:罚款和入狱 • US$250,000 and/or 5 years imprisonment, per violation 每项违法行为罚款25万美元,入狱5年或两者并罚• Interruption and Disruption of Business due to internal and government investigations 内部调查及政府调查影响公司的正常运营• Damage to Reputation 有损公司声誉• Effect on Stock Price 影响公司股票价格• Costs of Legal Defense 增加法律合规的成本 • Siemens paid US$500 million to attorneys and forensic accountants 西门子为此支付5亿美元律师和法务会计费用• Adverse employment consequences imposed by Companies themselves on employees directly involved or who knowingly fail to stop abuses TTM自身对直接涉案或未能阻止违规行为的雇员迚行处罚 73
  • 74. Notable FCPA Penalties• ABB reserved $850 million for a • Siemens paid $1.6 billion in fines to resolution of U.S. and European U.S. and German enforcement corruption charges in the first authorities in December 2008. quarter of 2010. • AB Volvo paid $19.6 million for• General Electric paid $23.4 million, violations discovered during the including $18 million of disgorged U.N. Oil for Food Programme profits, in July 2010. investigation in March 2008.• Daimler AG paid $91 million in • Chevron paid $30 million in disgorged profits in March 2010. disgorgement and penalties for U.N. Oil for Food Programme• BAE pleaded guilty to making false violations in November 2007. statements about its FCPA compliance program and paid a • Baker Hughes paid more than $44 $400 million criminal fine in million in April 2007. February 2010.• Halliburton and its subsidiary, Kellogg Brown & Root, paid $579 million in penalties for violations of the FCPA in February 2009. 74
  • 75. Some FCPA Principles• In addition to bribes, the law also prohibits corruptly offering any benefit or thing of ―value‖ directly or indirectly to a government official• Employees of state-owned enterprises and relatives of government officials may be ―government officials‖ under the FCPA• There is no de minimis exception• It is unlikely that the payments can be justified as ―facilitating‖ payments• No bribery is permitted under PRC law, which is more strict than US law• It is useless to argue that PRC anti-bribery laws are not consistently enforced, or ―it is necessary to do business‖ or ―everyone does it‖• If you know of the violation but were not involved, you may still be liable• If you did not know of the violation but should have known or ignored warning signs, you may still be liable• 美国反海外腐败法不但禁止向政府官员行贿,而且禁止向其提供的仸何利益或具有价值的物 品• 该法案不存在“小额礼品”的抗辩• 政府官员包括国有企业的雇员• 不存在真正的例外或抗辩理由 • 很难证明大多数付款出于“便利”或“促迚”之目的 • 中国本地法律禁止贿赂–其实中国法律比美国法律更严格 • 中国反贿赂法内部不一致或未被严格执行的事实并不重要 • “大家都这么做”的事实并不重要 75
  • 76. FCPA Books And Records Principles• Payments not properly recorded in the Company’s books and records may be a FCPA record-keeping violation even where there is insufficient proof of bribery 如果您应当知情或对警告–―警示标示”置之不理,即便不知情也不能免除您的法律责 仸 帐外交易和现金交易本身就很可疑 即使执法机构不能证明贿赂,他们通常能证明付款未在公司会计帐簿和记录中妥善记 载,而该行为也构成违法• Accounting violations are easier for the government to prove so beware of • Cash transactions • Off-books accounts and ledgers • Fake receipts • False or unsubstantiated expenses or cash advances• 切记,政府更易证明会计(“帐簿及记录”)及内部控制方面的违法行为 • 现金交易 • 帐外帐目及分类帐 • 假收据 • 虚假或无证明的费用或预支现金 76
  • 77. More FCPA Books And Records Principles• Companies can acquire FCPA problems in M&A transactions  Careful due diligence is essential in any acquisition  Important to carefully structure and document M&A transactions• 您还可能在并购交易中涉及美国反海外腐败法的问题  有必要在仸何收购活动中迚行细致的尽职调查  在交易架构及文件记录中采取保护措施可能有所裨益,但其保护程度有限 When in doubt, consult immediately with Company counsel 77
  • 79. 79
  • 80. 80
  • 81. CHINESE STATE SECRET LAWS• Secrets belonging to Chinese Government and state-owned enterprises ("SOEs"): the Law of the Peoples Republic of China on Guarding State Secrets includes provisions restricting the export of electronic data and the use of computers and internet.• The state secrets law is as vague as it is broad: • It provides that state secrets are ―matters that have a vital bearing on state security and national interests and, as determined according to statutory procedures, are known by people within a certain scope for a given period of time.‖ • It also includes a broad, catch-all category covering "other secret matters of the state which shall be kept confidential as determined by state departments for the maintenance of secrets.‖• Chinese enforcement authorities have almost unlimited discretion to define what information may constitute a state secret: • An American geologist, Xue Feng, was prosecuted for purchasing data regarding Chinese oil wells under a commercial contract • At a time when such information had not yet been classified as secret.• Many clients in China have dealings with the government or with SOEs. 81
  • 82. Preventive Maintenance 82
  • 83. Preventive MaintenanceCRIMINAL CIVIL• At best, white-collar • At best, SEC civil litigation criminal prosecution will be extremely costly to destroys reputation the company• At worst, it is corporation’s • At worst, SEC civil litigation death sentence, with prison can destroy a company. terms for responsible corporate criminals 83
  • 84. Suggested Measures to Prevent Corporate Liability• Invest in compliance and prevention training and procedures programs• Obtain insurance coverage• Establish document retention policy• Study statutes and regulations governing your industry • Seek advice early on how to apply them on a day-to-day basis 84
  • 85. Suggested Measures to Prevent Corporate Liability• Well drafted business agreement• Work closely with U.S. counsel to stay compliant of existing laws/regulations and keep abreast of proposed legislation and new development• Effective IP management • Chinese companies are beginning to understand and appreciate the importance of IP protection • Can be used as an offensive weapon or leverage in settlement discussions• Importance of insurance coverage 85
  • 86. Litigation Approach• Fact: 95% of cases settle before trial (IP cases, very few go to trial)• This forces litigants to ask: • What is my goal in the litigation? • How do I position the case for optimal settlement? • Which mediation/ADR mechanism best achieves my goal? • How can I shape the process to be as cost effective as possible 86