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15 February 2019

DoJ charges two with trade secrets theft

Two people, one American and one Chinese national, have been indicted by a US grand jury for plotting to steal technology with the aim of setting up a new company in China.

The  charges, filed in the US District Court for the Eastern District of Tennessee yesterday, February 14, include seven counts of trade secrets theft and one count of wire fraud.

“Not only can theft of this information be potentially devastating to our American companies, it could also pose a threat to our overall national and economic security”,  said US district attorney Doug Overbey.

Xiaorong You, an American national, and Liu Xiangchen of Shandong Province, China, are accused of stealing formulations for bisphenol-A-free (BPA-free) coatings from multiple American companies. BPA is a chemical used in the manufacture of plastics.

The two people are accused of conspiracy to commit trade secrets theft worth approximately $119,600,000. The companies allegedly targeted in the plot were not named in the indictment.

You was employed as principal engineer for global research at one of the companies from 2012 to 2017, the filing said. She subsequently worked at the second company until June 2018.

During this time, You conspired to steal trade secrets from the American firms and transfer the commercially-sensitive information to an unnamed Chinese company of which Liu served as general manager, it is alleged.

According to the indictment, they planned to use a Shandong province technological development program, Yishi-Yiyi, to develop the technology stolen from You’s employers.

Yishi-Yiyi is an offshoot of the national ‘Thousand Talents’ program operated by the Chinese government. The scheme is designed to incentivise people with advanced technical expertise and training in Western countries to return or move to China, the filing said.

John Demers, US assistant attorney general for the national security division, said that “China continues to use its national programs, like the ‘Thousand Talents,’ to solicit and reward the theft of our nation’s trade secrets and intellectual property”.

“The conduct alleged in today’s indictment exemplifies the rob, replicate and replace approach to technological development,” he said.

It is the latest in a string of DoJ indictments relating to alleged Chinese theft of American trade secrets. Last month, Chinese telecoms company Huawei was  accused of stealing technology from US competitors.

That followed the  indictment of ten Chinese hackers last October. The charges were related to an alleged Chinese Ministry of State Security conspiracy to steal commercially sensitive information.

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