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Ex-Nokian Tyres employees convicted in Finland’s biggest ever industrial espionage trial

Ten people have been convicted in Finland’s largest ever trial on charges of breaching commercial confidentiality. The ex-Nokian Tyres employees left the firm to establish their own research and development company, but were prosecuted under Finland’s corporate confidentiality rules.

Rengas puristimessa Nokian tehtailla.
Nokian Tyres is Finland's biggest tyre company. Image: Jussi Mansikka / Yle

Finland’s largest ever industrial espionage trial has reached a conclusion, with convictions for 10 defendants, eight of whom received suspended prison sentences and two who drew fines.

The defendants’ new firm Black Donuts Engineering will have to pay 300,000 euros in fines and 537,000 euros in proceeds of crime forfeiture to the state, and some 600,000 euros in legal costs to Nokian Tyres.

Of the eight ex-employees who were slapped with suspended jail sentences, the longest was a year and six months.

Three leading figures from Black Donuts, including CEO Kai Hauvala, were banned from owning or running businesses for between 3 and five years, but will be permitted to carry on working for the new company in lesser roles.

Secrets not for sale

The court rejected the prosecution and Nokian Tyres demands for millions of euros of fines and compensation.

The case hinged on whether the intellectual property the ten defendants took with them when they established or joined the new firm was really secret. They posessed thousands of files from Nokian Tyres, and the court ruled that—contrary to the Black Donuts claim that the knowledge was widely-known in the industry—much of that information was secret.

"Information is not confidential if it can be obtained by studying a product, if it can be purchased, if it is generally known or if it is part of a professionally trained individual’s skillset," read the court judgement. "The District Court has come to the conclusion that none of those conditions has been met, so the information is confidential."

Appeals possible

Nokian Tyres CEO Hilla Korhonen said the firm was pleased with the verdict, but will retain the right to appeal the verdict to obtain stiffer punishments. 

"It’s important that there is a clear and strengthened view on what is corporate confidentiality and that this clear boundary as to what can be done and what can’t be done," said Korhonen.

Black Donuts expressed dissatisfaction at the verdict, but were cautious about whether or not they would appeal.

"It surprised us," said Hauvala. "We’ll have to look carefully at the grounds for the verdict and how it has been formulated. We regard the verdict as unfair. We also have to look pragmatically at the good sides. It’s great that there is an interim verdict in the matter. This has gone on for 5-6 years."

Hauvala was satisfied that the sums to be paid in compensation and fines were much smaller than initially demanded, and will allow his company to continue operating. The company employs 55 people and is projected to turn over 12 million euros this year.

Edit: This story was updated at 4.40pm to correct the number of convictions in the case from eight to 10 and to clarify the sentencing: suspended prison sentences for eight defendants and fines for two.

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