Following the decision by the Taiwan Prosecutor to pursue criminal proceedings against a subsidiary of Asustek Computer, Inc. (TSE: 2357) and four of that subsidiary's employees for the alleged misappropriation of trade secrets from VIA Technologies, Inc. (TSE: 2388), VIA today announced that it has filed a civil suit in the Taipei District Court seeking damages of at least NT$4.137 billion (US$138 million) from Asustek Computer, Inc and its subsidiary Asmedia Technology.

The lawsuit is being filed to recover the losses incurred as a result of the alleged misappropriation of VIA intellectual property related to USB technology. Also named in the suit are Asmedia Chairman Jerry Shen, Asmedia President Lin Chewei, and other Asmedia employees involved in the case.

"As a long-time leader in IC design and technology innovation, VIA strongly believes in the importance of protecting intellectual property rights," commented Wenchi Chen, CEO of VIA Technologies, Inc. "In addition to protecting interests of VIA and our shareholders, the aim of this suit is to ensure our industry operates in a healthy market environment that fosters innovation and promotes fair competition."

On 8 November 2013, the Taiwan Prosecutor decided to pursue criminal proceedings against Asmedia and four employees, including Chang Chi, VP of R&D, after the conclusion of its investigation into the alleged misappropriation of VIA's trade secrets, as well as violation of Copyright Act. In addition to seeking damages, VIA is also requesting the court to instruct Asmedia to cease the production and sales of the allegedly infringing products.

Taiwan amended its Trade Secret Act earlier this year to enhance its IP protection laws. One key reform included increasing the penalties for intellectual property crimes, so anyone who misappropriates trade secrets in Taiwan with the intent to use them overseas may be imprisoned for up to 10 years and fined up to US$1.7 million, or possibly more if there are substantial illicit gains.

The lawsuit alleges that a former VIA executive, Chewei Lin, left VIA in 2007 and joined Asmedia (controlled by Asus Group), taking dozens of VIA employees with him, and also VIA's intellectual property related to USB technology, including host controllers and device controllers. Those products are used in many computing and consumer electronics products, including PCs, external Hard Disk Drives, and peripheral devices. Asustek Computer, Inc. is the largest single purchaser of Asmedia USB products.

Prior to that, Asmedia had no expertise in the USB field, according to the lawsuit. Given the complexity and legacy USB 1.0, 1.1, and 2.0 IP required for the development of USB 3.0 chips, the Taiwan Prosecutor concluded in the criminal case filing that "it is extremely difficult to develop and take such chips into mass production in such a short time frame [of one year]."

According to the results of investigation carried out by the Taipei District Prosecutor, the evidence of trade secret theft is strong enough to justify the criminal prosecution of Asmedia and four Asmedia employees, including R&D VP Chang Chi.

The total Asus Group stake in Asmedia is 56.23%. Asustek Computer, Inc is Asmedia's single largest shareholder with a stake of 43.89% and two other subsidiaries hold the remainder. Asustek Computer, Inc is the largest single customer of Asmedia. Asmedia Chairman Jerry Shen is also the General Manager of the Asus motherboard business unit.