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Foxconn Asks Hong Kong Court to Strike Out BYD Claims

Foxconn International Holdings Ltd. urged a Hong Kong judge to throw out claims made by BYD Co. in a countersuit that accuses Foxconn of gathering false evidence.

The claims should be struck because BYD failed to provide any “material” facts or allegations to back its case filed Oct. 2, 2009, Winston Poon, Foxconn’s lawyer, said at a hearing today in the Court of First Instance in Hong Kong.

“Not only are the matters immaterial, they are also vexatious,” Poon said. “They will waste the court’s time and money.” Judge Louis Chan didn’t specify at the end of the hearing when he would rule on Foxconn’s request.

BYD, backed by billionaire Warren Buffett, countersued after two Foxconn units filed a suit in 2007 that claimed BYD recruited Foxconn employees and stole the companies’ trade secrets. BYD, China’s largest maker of rechargeable batteries, doubled its revenue from its handset business in 2005, 2006 and 2007 as a result, Foxconn said in court documents.

In its countersuit, BYD accuses its rival of unlawful interference with its business, defamation and conspiracy to injure. Foxconn was involved in planting documents and coercing a former employee to confess he had stolen secrets, according to BYD’s filings.

“The Foxconn parties embarked upon a course of conduct of procuring and using false or fabricated evidence,” BYD said in its suit. Foxconn’s “ultimate objective” was to damage the business relationship between BYD and its investors and customers, BYD said.

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In 2008, BYD failed to persuade a Hong Kong judge that the case should be tried in Shenzhen, China, where BYD is based. Judge Thomas Au in Hong Kong ruled he wasn’t convinced Shenzhen was a preferable venue.

Liu Xiang Jun, former chief operating officer of one of the Foxconn units, joined BYD in 2005. In a separate proceeding, he was convicted in Shenzhen of infringing Foxconn’s business secrets, according to court documents. Si Shao Qing and Zhang Jian, who had worked for the same unit, were also convicted of infringing Foxconn’s business secrets.

Foxconn, the world’s largest contract-manufacturer of mobile phones, faces competition from BYD for orders of handset components from customers including Nokia Oyj.

BYD fell 3.6 percent in Hong Kong to HK$54.40. The shares have fallen 21 percent this year compared with a 6.6 percent decline in the benchmark Hang Seng Index. Foxconn International Holdings Ltd. rose 0.4 percent to close at HK$5.13.

The case is HCA2114/2007, BYD Co. and Shenzhen Futaihong Precision Industry Co. in the Hong Kong Court of First Instance.

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