The U.S. government is continuing its endeavor of prosecuting individuals for the theft of U.S. trade secrets and for allegedly selling or bringing these trade secrets to China. The U.S. government is demonstrating that it considers the protection of trade secrets, particularly those used in national defense and other essential technology, to be a priority.
On October 1, 2020, the U.S. Attorney’s Office for the District of Massachusetts reported that Haoyang Yu, a U.S. citizen who was born in China, his wife Yanzhi Chen, and their company Tricon MMIC LLC, were charged in a 24-count indictment for the alleged theft of American trade secrets worth millions of dollars from Analog Devices. Analog Devices, which has its headquarters in Norwood, Massachusetts, is an international semiconductor company. Yu was charged in 2019 with stealing, downloading, and copying Analog Devices’ trade secrets. Now, he and his wife have been charged with possession and attempted possession of a trade secret; transporting stolen goods; smuggling; visa fraud; and procuring U.S. citizenship unlawfully.
Yu, who was born in Harbin China and became a naturalized U.S. citizen in 2017, worked at Analog Devices as a principal design engineer from July 2014 until July 2017. As a principal design engineer, he designed and developed parts of monolithic microwave integrated circuits (“MMICs”), which are used in communications devices, as well as defense and aerospace technology. The indictment alleges that Yu had access to Analog Devices’ present and future product designs, as well as its files and testing procedures. He allegedly used this access to download confidential schematic modeling and design files and subsequently uploaded them to his Google Drive account.
In March of 2017, about five months before Yu resigned from Analog Devices, Yu and Chen established Tricon, which serves defense and aerospace customers and specializes in MMIC amplifiers. When Yu resigned from Analog Devices, he signed an agreement confirming that he had surrendered all proprietary data or information he gained from his employment. However, he allegedly kept this information in his possession on his Google Drive account and personal computers. He then marketed and sold about 20 devices from the company as his own, even employing the same Taiwanese semiconductor plant to manufacture Tricon’s parts using Analog Devices’ stolen designs. Yu and Chen also allegedly smuggled technology from the United States to Taiwan without obtaining the required export license. Additionally, when Yu applied for naturalization, he allegedly failed to disclose the theft of Analog Devices’ trade secrets. If they are convicted, Yu and Chen could face up to 20 years in prison for wire fraud, as well as a fine of $250,000 and three years of supervised release. The other charges each allow for an up to 10-year sentence in prison, as well as an additional $250,000 fine and three years of supervised release.
In addition to demonstrating the U.S. government’s continued focus on protecting trade secrets from misappropriation by the Chinese government, this case exemplifies why many companies may consider supplementing their trade secrets programs with technical tools designed to prevent sensitive information from leaving the confines of their network. For example, data loss prevention software may have been able to stop Yu’s upload of Analog Devices’ files to his Google Drive account. Relying on only signed policies and procedures for departing employees can make companies more susceptible to the theft and misappropriation of trade secrets and other important data.