The views expressed in any article published in this blog are the author's own and do not necessarily reflect the views of Joseph Foster or Bob Lupoli.

Wednesday, April 27, 2011

Chinese Cheating: one example - St. Jude Medical

Joe:  this is a good example of Chinese cheating. I’ll bet it is going on a lot more than has been reported. It is a big deal not only in the medical device industry. In the automotive aftermarket there are many copies of cold air intake systems for example and many other performance products. Brands are being stolen. American buyers need to be educated about the counterfeit goods problem beyond the highly visable brands like Gucci etc. The cheating is happening on probably a much larger scale to small and medium sized businesses. That really bad part is St. Jude I think is unlikely to collect anything! The Chinese cheat by stealing information, with materials, with labor, and with exchange rates. Why do we put up with this for a country that is not a democracy?  –Bob

 [Saint Paul Pioneer Press (MN)] April 26--A jury in Los Angeles Superior Court last week awarded Little Canada-based St. Jude Medical a $2.3 billion judgment against a company and former employee accused of stealing trade secrets, the medical device company said Monday.

The jury found that former employee Yongning Zou and a Chinese company he founded, called Nervicon, stole trade secrets from a California-based division of St. Jude Medical in order to set up a rival medical device firm, St. Jude Medical said in a statement.

According to St. Jude Medical's complaint:

The company hired Zou in 2003 as a hardware design engineer and, at his request, sponsored him to become a permanent resident of the United States. In June 2009, not long after becoming a permanent resident, Zou resigned but kept a flash drive of confidential company information. Just a few weeks earlier, Nervicon was founded, with Zou as one of three shareholders and its sole supervisor.

St. Jude Medical said the jury awarded a total of $1.47 billion against Zou and a further $868 million against Nervicon. St. Jude Medical said the award follows a November 2010 preliminary injunction against Zou and Nervicon.

"We take the protection of proprietary intellectual property and trade secret misappropriation very seriously," St. Jude Medical said in the statement. "We are pleased with the jury's findings."

The judgment was first reported Monday by an online news service called, which noted that neither Zou nor a representative appeared at the trial, raising a question as to whether St. Jude would ever collect the $2.3 billion.

Company spokeswoman Amy Jo Meyer declined comment on whether St. Jude Medical might record a payment from the judgment during the company's second quarter.

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