Economic Espionage

Trial of Ex-Coca-Cola Principal Engineer Accused of Espionage and Stealing Trade Secrets Begins.

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The trial of Xiaorang You (aka “Shannon You”)—the principal research engineer accused of stealing trade secrets from several companies, including Coca-Cola—began on April 6, 2021 in the Eastern District of Tennessee at Greeneville. Ms. You was indicted by a grand jury on February 12, 2019 for theft of trade secrets, conspiracy to commit theft of trade secrets, and wire fraud. The trade secrets were valued at more than $119 million. In August 2020, a superseding indictment added additional charges related to economic espionage.

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Chinese and Russian Hackers Targeting COVID-19 Vaccine Research

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The latest development in the Department of Justice’s “China Initiative” occurred earlier this month, as the DOJ unsealed an 11-count indictment charging two Chinese nationals with stealing hundreds of millions of dollars’ worth of “trade secrets, intellectual property, and other valuable business information”— including potential COVID-19 research.  The two Chinese hackers allegedly worked for their own benefit and together with the Ministry of State Security, China’s intelligence and security agency, to infiltrate the electronic networks of a number of targets including several American biotech firms “publicly known for work on COVID-19 vaccines, treatments, and testing technology.” READ MORE →

In Pursuit of Chinese Trade Secret Theft: Fresh Allegations Against Huawei and Chinese Military Grabs 145 Million SSNs

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Loyal readers are familiar with the DOJ’s “China Initiative,” launched in November 2018 to prosecute the theft of U.S. trade secrets by or for Chinese interests. Attorney General Barr reaffirmed the DOJ’s commitment “to combat the threat posed by theft directed and encouraged by the PRC” in an address at the China Initiative Conference last month. The DOJ’s campaign recently intensified with two new, gripping indictments. READ MORE →

In a Blockbuster Economic Espionage Act Prosecution, an Attempt by the Government to Hide the Ball?

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An ongoing, headline-grabbing trade secret theft prosecution against a Chinese spy is also quietly presenting a, say, disquieting attempt by prosecutors to stretch the law on what it is required to plead and prove.  On the civil side, when a plaintiff sues for trade secret theft, there’s almost always a hotly contested point of proof on whether the alleged stolen material is really a trade secret.  It’s well-established, though, that when the government charges a defendant criminally with the inchoate forms of trade secret theft—attempt or conspiracy being the two spelled out under the Economic Espionage Act—the government has no burden to prove that the underlying information was actually a trade secret.  (Loyal readers will recall our recent post on United States v. O’Rourke, where the defendant tried to argue otherwise at sentencing.)  Now, in a brief filed just last week, the government seems to be taking this one step further and arguing that it has no duty even to identify the trade secrets at issue. READ MORE →

Home Remedies for Politically Charged IP Theft

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In January of this year, Chinese wind turbine manufacturer Sinovel Wind Group Co. Ltd. was convicted of stealing trade secrets from U.S. company AMSC Inc. The theft caused AMSC, more than $800 million in losses and forced the company to lay off more than half its global work force. Sinovel’s sentencing—which could include fines exceeding $1 billion and a multiyear probationary period—is scheduled for June 2018. READ MORE →

David Nosal Raises Unusual Fairness Argument in Yet Another Attempt to Avoid 366-Day Prison Sentence

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Just over four years ago, in January 2014, a court sentenced former Korn/Ferry regional director David Nosal to one year and one day in prison for violations of the federal Computer Fraud and Abuse Act and the Espionage Act.  Nosal appealed the sentence, but his appeals ultimately failed: the U.S. Court of Appeals for the Ninth Circuit upheld Nosal’s sentence, and the U.S. Supreme Court denied review of the case.  Luckily for Nosal, his 2014 motion for release pending appeal was granted, so he has not served any time during the four years of appeals. READ MORE →

Nosal Reply Brief Sets Stage for SCOTUS Cert Decision

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The U.S. Supreme Court, which just began a new term on Monday with a full complement of nine justices, is expected to soon decide whether it will hear the appeal of David Nosal, the former Korn Ferry executive whose conviction under the Computer Fraud and Abuse Act was upheld in a controversial and closely-watched Ninth Circuit decision last year.  Nosal submitted his reply brief in support of certiorari on September 19, 2017, responding to the Department of Justice’s opposition submitted two weeks earlier.

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ECONOMIC ESPIONAGE AND PROTECTING TRADE SECRETS: Ninth Circuit Holds That Reasonable Measures to Guard Technology are Sufficient

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How can you protect your trade secrets from a vast and well-concealed international effort to steal those secrets? What constitutes a “reasonable” effort to protect that information where at least one competitor may already have the information?  The Ninth Circuit recently opined on these matters in the ongoing saga of U.S. v. Liew.

In 2014, Walter Liew and his company, USA Performance Technology, Inc., were convicted of multiple offenses, including claims under the Economic Espionage Act and conveying misappropriated trade secrets to a third party. The trade secrets related to DuPont’s technology for producing titanium dioxide, which is used in a wide range of products such as paint and Oreo cookies. READ MORE →

The Saga Continues: New York’s Highest Court Will Weigh in on Aleynikov’s Fate

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On April 20, 2017, the New York Court of Appeals issued a brief order continuing former Goldman Sachs programmer Sergey Aleynikov’s eight-year voyage through the state’s and country’s legal systems.  Here’s the issue:  does making a digital copy of misappropriated source code instead of physical copy constitute a “tangible reproduction or representation” of the source code?   READ MORE →

Password Sharing Is Not a Crime, Ninth Circuit Reassures in Denial of Nosal’s Request for Rehearing

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Since the early days of this blog, we’ve been covering the ongoing legal battle involving ex-Korn Ferry recruiter David Nosal as it winds its way through the courts. The latest chapter in this saga came on December 8, 2016, when a Ninth Circuit panel clarified that the Computer Fraud and Abuse Act (CFAA) does not criminalize innocent password sharing, in a published opinion denying Nosal’s request for a rehearing en banc. READ MORE →