Avery Dennison Charge Uncovers Four Pillars Criminal Conduct

Avery Dennison Corp. has been accused of fraud and theft of trade secrets by Four Pillars Enterprise Co. Ltd., ("Four Pillars"), the largest adhesive tape manufacturer in Asia. The charges, filed December 30, 1998, were outlined in a series of lawsuits and administrative filings in Taiwan and the People's Republic of China. The suits seek damages of $262 million, and detail a litany of fraudulent abuse and behavior by Avery Dennison. The suit fails to mention that two of Four Pillars' company officers are being held in the US, pending trial on fraud, racketeering and conspiracy charges carried out by the Taiwanese company against Avery Dennison.

At the heart of Four Pillars' allegations is the charge that in 1987, Avery Dennison approached Four Pillars to discuss a possible joint venture in the People's Republic of China. Over the course of the next seven years, Four Pillars, acting in good faith, provided Avery Dennison with proprietary business and technical information about its own operations in Asia. This information was then used by Avery Dennison when it broke off the joint venture talks to establish its own factory in Kuen Shan, China, in 1994.

"We filed suit to protect not only our interests, but the legal interests of other Taiwanese companies," said Hwei-Ling Yang, vice president of Four Pillars. "We hope to put a stop to the predatory tactics of our unscrupulous competitors who use the guise of 'joint ventures' to acquire trade secrets of Taiwanese companies."

In addition to charging Avery Dennison with fraud, Four Pillars is also seeking administrative relief against Avery Dennison for obtaining business secrets by fraudulent means, and engaging in unfair competition.

Four Pillars also filed claims in the People's Republic of China charging Avery Dennison with violations of the Unfair Competition Acts and the General Law of Civil Acts. In Taiwan, Avery Dennison is charged with violations of the Criminal Law and Fair Trade Laws.

Avery Dennison Corp. responded today to the lawsuit announcement by denouncing Four Pillars' charges.

"We have not yet been served with the complaint, but the allegations described in the news release are completely without merit. This is an attempt to distract attention from Four Pillars' own criminal conduct," said Robert G. van Schoonenberg, senior vice president and general counsel of Avery Dennison.

"For over a year, the chairman of Four Pillars, Mr. P.Y. Young, and his daughter, Ms. Sally Yang, a Four Pillars officer, have been under house arrest in the United States awaiting trial on 21 criminal counts including violations of the U.S. Economic Espionage Act, mail fraud, wire fraud, money laundering and receipt of stolen property.

"Mr. Young and Ms. Yang, who were arrested by the Federal Bureau of Investigation in Sept. 1997, are charged with participating in the theft of Avery Dennison trade secrets over a period of eight years and are set to stand trial in March of this year for those crimes.

"At the time of their arrest in 1997, Avery Dennison announced that it had filed a civil lawsuit against Four Pillars, Mr. Young and Ms. Yang. That lawsuit, for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), conspiracy, theft of trade secrets, unfair competition, fraud and other charges related to economic espionage, will be tried following the completion of the criminal trial," said van Schoonenberg.

Under the RICO act, Avery Dennison would be able to collect treble damages against Four Pillars.

Based in Pasadena, the company makes a wide range of products for consumer and industrial markets, including Avery-brand office products, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, battery labels, automated retail tag and labeling systems, and specialty tapes and chemicals.