Price for Stolen Technology
“The 18th Iron Day Event” was held at the POSCO Center On June 9. In the ceremony, those working in the steel industry including POSCO chairman Kwon Oh-joon vowed to take off to smart manufacturing that integrates ICT technology and expand production of high-value-added products in the face of the fourth industrial revolution.
Prior to this, in March, POSCO announced its new short- to mid-term strategies, which focus on a plan maintain the world’s highest profitability as a steelmaker and foster future growth business based on its unique technologies and differentiated capabilities. POSCO is preparing to take off for the next 50 years.
The highlights of POSCO's new strategies are to upgrade its steel business based on proprietary technologies, improve the profitability of its non-steel business, promote future growth based on differentiated capabilities, and make the group business smarter.
According to the new strategies, POSCO plans to expand its gap with the No. 2 company by producing and selling the best quality products based on unique technologies such as World Premium, which is POSCO’s world-class competitiveness.
Some experts say that POSCO's new strategies are basically a right step in consideration of the Korean steel industry’s current situation. However, they are skeptical about whether the new strategies will be able to pay off for POSCO when taking into account a case where POSCO that received high-tech steel plate manufacturing technology leaked by an industrial spy was brought into court for a violation of the Unfair Competition Prevention Act by Nippon Steel & Sumitomo Metal, the largest steelmaker of Japan last year.
In fact, it is not an exaggeration to say that industrial competitiveness hinges on technology. So the experts say that it is understandable that POSCO received the technology even though the Korean steelmaker was aware of the fact that it was a competitor's technology.
The technology in question handed over to POSCO was a method of manufacturing grain-oriented electrical steel sheets. This steel sheet makes an improvement to the efficiency of transformers and motors, and is widely used in electric vehicles, hybrid cars, and materials for new and renewable energy. This is a so-called high value-added product rising as a hot item these days.
The industrial spies were employees of Nippon Steel & Sumitomo Metal. It is highly supposed that POSCO which received technology from them knew that the technology is the competitor's core technology. Nippon Steel & Sumitomo Metal sued POSCO for violating the Unfair Competition Prevention Act in Korea, the United States and Japan. The Japanese steelmaker requested a ban on the use of trade secrets (technology) and demanded 98.6 billion yen for the damage. However, in view of the long-standing relationship with POSCO, Nippon Steel & Sumitomo Metal settled with POSCO in September 2015 and dropped all lawsuits.
Nippon Steel & Sumitomo Metal had no mercy on the employees who leaked the technology. It deems very natural for Nippon Steel & Sumitomo Metal to do so considering the fact that about ten former employees had leaked trade secrets to POSCO for about 20 years since the mid-1980s.
Japanese companies rarely call employees to account for industrial espionage cases. This time, Nippon Steel & Sumitomo Metal did not. "If increasingly more employees think that they can elude their responsibilities for technology leaks, technology leak risk will balloon. We can root out industrial espionage without tolerating employees’ misconduct," said an official at the Legal Team of the Nippon Steel & Sumitomo Metal.
The lawsuit over the technology leak between Nippon Steel & Sumitomo Metal and POSCO reaffirms the importance of technology. The case also gives people a glimpse of the precision of Japanese steel companies. On the contrary, it showed a Korean company’s bungling response.
Nippon Steel & Sumitomo Metal which mutually shares stakes with POSCO and has maintained an amicable relationship with the Korean steelmaker. But as Nippon Steel & Sumitomo Metal learned that POSCO had stolen its technology, the Japanese steel maker surreptitiously prepared the lawsuit, secured a truckload of litigation materials and pursued the lawsuit in their favor and finally led POSCO to surrender to Nippon Steel & Sumitomo Metal. This process offered a glimpse at the Japanese people’s thorough preparations and tenacious exhaustiveness.
Even POSCO, a large Korean corporation, finally lost the legal battle with an optimistic hope based on a bumbling response, and could not help but make a negotiation proposal disadvantageous to POSCO. Putting it mildly, POSCO took a positive attitude, but in cruel realities such as a lawsuit, POSCO will never win. This case will likely set an example to other Korean companies.