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.
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
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
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
In January of this year, the DOJ indicted the Chinese telecom giant Huawei on counts of theft of trade secrets conspiracy, attempted theft of trade secrets, wire fraud, and obstruction of justice. On August 1, Huawei moved to dismiss the indictment for “selective prosecution.” Huawei contends that it is the “target of the politically motivated decision, at the highest levels of the U.S. government, to pursue the selective prosecution of Chinese companies and nationals for the alleged misappropriation of intellectual property.” In essence, it argues that the DOJ unconstitutionally seeks to punish Huawei because it is a large, successful Chinese company, not because of illegal behavior by the company or its agents. READ MORE
As anticipated in May, rising trade tensions between the U.S. and China have led to a series of escalating measures including tariffs and trade investigations. In July 2019 testimony to the Senate Judiciary Committee, FBI Director Christopher Wray noted that more than 1,000 active investigations on intellectual property theft “lead back to China.” Against the backdrop of these issues, the Department of Justice announced the “China Initiative” on November 1, 2018. The DOJ explained that the Initiative was launched against the background of prior findings by the Administration regarding China’s trade practices. One of the China Initiative’s key goals is to “[i]dentify priority trade secret cases, ensure that investigations are adequately resourced; and work to bring them to fruition in a timely manner and according to the facts and applicable law.” READ MORE
Trade Secrets Watch has been covering the escalating economic tension between China and the U.S., including the U.S. Trade Representative’s investigation on China’s alleged IP theft under Section 301 of the Trade Act of 1974, dueling imposition of tariffs in March 2018, and the USTR announcement of products against which it proposed to impose 25 percent import duties. READ MORE
In July 2018, a federal judge in Wisconsin imposed a $1.5 million penalty—the maximum statutory fine—against Chinese wind turbine manufacturer, Sinovel Wind Group Co. Ltd., for stealing trade secrets from Massachusetts-based technology company, AMSC Inc. In addition to the fine, Sinovel was sentenced to 1 year probation and ordered to pay $57.5 million in restitution to AMSC, an amount the companies had settled on prior to the ruling. Sinovel also agreed to pay $850,000 to Massachusetts wind turbine operators. READ MORE
Just days after the European Union’s widely-discussed new data privacy regulations, the General Data Protection Regulation (“GDPR”), took effect on May 25, 2018, another EU-wide legal change quietly occurred. (And if you’re still puzzling through GDPR compliance, fear not: We have plenty of resources for you here.)
But on to the less familiar date: June 9, 2018, was the deadline for EU member states to comply with the new Directive on the Protection of Trade Secrets. As we’ve reported before, the European Parliament adopted the Directive in 2016 to harmonize national laws regarding trade secrets protection. Under the Directive, trade secrets owners across Europe should enjoy increased protection and uniformity—welcome news, given that the laws have historically differed significantly from country to country.
Trade Secrets Watch previously had its eye on the U.S. Trade Representative’s investigation on China’s alleged IP theft under Section 301 of the Trade Act of 1974. As an update, late last month, President Trump announced the imposition of tariffs on as much as $60 billion worth of Chinese goods due to China’s alleged IP theft and intimidation tactics to obtain American technology. China, in turn, proposed tariffs of its own on 128 American products, valued at $3 billion. READ MORE