Everlight Electronics That Illegally Obtained LED Technology Was Charged

Seoul Semiconductor (KOSDAQ:046890), a leading global innovator of LED products and technology, has announced that the International Crimes 4 Team at the Gyeonggi Nambu Provincial Police Agency in Korea is expected to detain three individuals, “A” – a former Managing Director of Seoul Semiconductor, “B” and “C” – former employees of Seoul Semiconductor, who divulged automotive LED technology that cost KRW 560 billion and seven years in development to Everlight Electronics, a competitor of Seoul Semiconductor located in Taiwan.

The three individuals will be charged for violating the Act on Prevention of Divulgence and Protection of Industrial Technology, and the Unfair Competition Prevention and Trade Secret Protection Act, and forwarded for prosecution.

Moreover, the CEO of Everlight Electronics and Everlight itself, both liable for the technology divulgence, have been charged under the Act on Prevention of Divulgence and Protection of Industrial Technology.

A, a former Managing Director of Seoul Semiconductor, took umbrage during his salary negotiations and sought out new employment opportunities using technology illegally obtained from Seoul Semiconductor as leverage. During the course of his search, A agreed to join Everlight Electronics in Taiwan as a high-paid Vice President.

Furthermore, investigations revealed that A attempted to use the information he gleaned illicitly from Seoul Semiconductor to develop an LED product for automotive headlights. To expedite development, A offered B and C, both researcher and former subordinate of A at Seoul Semiconductor, salary increases of 200% each and new jobs at Everlight Electronics in return for technical data from Seoul Semiconductor.

B and C took out laptops from the company to show secret materials of Seoul Semiconductor to A, and browsed for the secret information using their laptops at home on weekends to avoid suspicion from their colleagues. B and C also took photos of the information and either sent them via SNS or delivered them in person at Everlight Electronics in Taiwan.

In particular, B and C learned that Seoul Semiconductor had filed an injunction lawsuit against A for prohibition of competitive transaction as he joined Everlight Electronics in Taiwan, and used aliases and fake business cards to avoid litigation. They even denied the fact they were under the employ of Everlight Electronics during the investigation.

However, facts of the case showed that B and C were offered twice their previous salaries at Seoul Semiconductor, residence fee, monthly a week-long holidays, and round-trip airfares, etc. from Everlight Electronics.

Seoul Semiconductor invests approximately 10% of its annual sales into development of LED technology. In 2011, it produced automotive LED the first in Korea. As a result of its endeavors, Seoul Semiconductor holds more than 12,000 patents, and has been listed as one of the top companies around the world in terms of Patent Power compiled by IEEE (Institute of Electrical and Electronics Engineers), a global technical professional organization for electronics and electrical based in the USA. Seoul Semiconductor is the fourth largest LED manufacturer globally. The global LED lighting market currently stands at KRW 37 trillion. However forecasts expect the sector to reach KRW 52 trillion moving forward.

Separate from this case, Seoul Semiconductor has filed lawsuits against Everlight Electronics in Taiwan for five LED patent infringements.

“We estimate that, if A, B, and C were not discovered and charged, it would have lost KRW 560 billion in research and development over a seven-year period, and encroached upon its sales which currently stands at KRW 1 trillion per year,” said Yong Tae Lee, compliance department executive vice president of Seoul Semiconductor.

“The Police will leverage all legal procedures to track down suspects who leak and divulge technology overseas, as in this case, even when said suspects flee the country. Also, it will cooperate with relevant authorities to enforce measures that will allow the Police to restrict imports/exports and prohibit entry of personnel from foreign corporations that engage in industrial espionage. Moreover, it will continue to work on recovering financial damages caused by the divulgence of technology,” said the Gyeonggi Nambu Provincial Police Agency.

Lawsuits for LED patent infringements against Everlight Electronics (“E”)
#		Case		Date & News Release
1		SSC v. E (4)		May 2017		In Germany, Seoul Semiconductor filed “two” patent infringement litigations against a distributor of Everlight products
2				Feb. 2018		Seoul Semiconductor wins patent litigation against Everlight in the UK and the UK court orders Everlight to pay significant Litigation costs to Seoul Semiconductor
3				Feb. 2018		In Italy, Seoul Semiconductor files a patent infringement litigation against a distributor of Everlight products
4				Jul. 2018		In Japan, Seoul Semiconductor files a patent infringement litigation against a distributor of Everlight products
5		Nichia v. E (5)		Mar. 2016		In China, Nichia filed a patent infringement lawsuit against Everlight’s China subsidiary
6				Oct. 2016		The Japan court rules that distributors of Everlight products infringed Nichia’s patent
7				Nov. 2016		The German court grants preliminary injunctions against Everlight’s LED products for infringement of Nichia’s patent
8				May 2017		U.S. Federal Court affirms that Everlight infringed Nichia’s patent
9				Jul. 2017		The German court rules that Everlight’s German subsidiary infringed Nichia’s patent
10		Bridgelux v. E (1)		Aug. 2017		In U.S., Bridgelux files a patent Litigation against Everlight for infringement of 5 patents

* As a result of a lawsuit regarding the prohibition on the change of employment, which forbids a person from joining a competitor of his/her former employer for a set period of time (1~2 years) after termination, defendant A was ordered to pay KRW 100 million for violating his Non-competition agreement and joining Everlight Electronics, and a further KRW 2 million per day if A continues employment at Everlight Electronics. (Seoul Central District Court, April 2017).

About Seoul Semiconductor
Seoul Semiconductor develops and commercializes light emitting diodes (LEDs) for automotive, general illumination, specialty lighting, and backlighting markets. As the fourth-largest LED manufacturer globally, Seoul Semiconductor holds more than 12,000 patents, offers a wide range of technologies, and mass produces innovative LED products such as SunLike – delivering the world’s best light quality in a next-generation LED enabling human-centric lighting optimized for circadian rhythms; WICOP – a simpler structured package-free LED which provides market leading color uniformity and cost savings at the fixture level, providing high lumen density and design flexibility; NanoDriver Series – the world’s smallest 24W DC LED drivers; Acrich, the world's first high-voltage AC-driven LED technology developed in 2005, including all AC LED-related technologies from chip to module and circuit fabrication, as well as multi-junction technology (MJT); and nPola, a new LED product based on GaN-substrate technology that achieves more than ten times the output of conventional LEDs. UCD constitutes a high color gamut display which delivers more than 90% NTSC. To learn more, visit www.seoulsemicon.com.

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Contact information

Seoul Semiconductor Inc.
Jeonghee Kim, +82-70-4391-8311
jeonghee.kim@seoulsemicon.com