Recent United States Department of Justice (“DOJ”) indictments of Chinese hackers provide a reminder that trade secrets and other intellectual property stored on databases are attractive targets to bad actors. The DOJ announced that seven international defendants were charged in connection with computer intrusion campaigns impacting more than 100 victims in the United States and abroad.

The victims of the cyberattacks included software development companies, computer hardware manufacturers, telecommunications providers, social media companies, video game companies, non-profit organizations, universities, think tanks, and foreign governments. The hacking facilitated the theft of source code, software code signing certificates, customer account data, and other valuable business information. These cyberattacks also enabled the defendants’ other criminal schemes, including ransomware attacks and “crypto-jacking” schemes, which involve the unauthorized use of victim computers to “mine” cryptocurrency.

The United States District Court for the District of Columbia issued arrest warrants for the defendants. Five of the defendants are residents and nationals of China and remain fugitives. Two other defendants, charged with conspiring with the Chinese hackers to profit from computer intrusions targeting the video game industry, were arrested in Malaysia. In addition to the arrest warrants, the court issued seizure warrants that resulted in the seizure of hundreds of accounts, servers, domain names, and command-and-control (“C2”) “dead drop” web pages used by the defendants to conduct their computer intrusion offenses.

These indictments are part of a larger effort by U.S. law enforcement to stop Chinese appropriation of American trade secrets.  For example, in July 2020, the DOJ obtained other indictments of individuals involved in state-sponsored theft, and  the U.S. State Department closed the Chinese consulate in Houston, Texas, in response to allegations that certain trade secret thefts were being carried out by Chinese operatives.

The recent actions serve as a reminder that bad actors are actively pursuing to wrongfully acquire trade secrets from United States-based companies. It is important to monitor network and software security and to eliminate vulnerabilities that can be targeted by hackers. Learn more about best practices to protect trade secrets and prevent theft here.

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Photo of Christine B. Hawes Christine B. Hawes

Christine B. Hawes is a counsel in Crowell & Moring’s Labor & Employment Group. Christine’s practice focuses on litigation of individual and class actions arising in all areas of labor and employment law. She also provides counseling to clients on a wide variety…

Christine B. Hawes is a counsel in Crowell & Moring’s Labor & Employment Group. Christine’s practice focuses on litigation of individual and class actions arising in all areas of labor and employment law. She also provides counseling to clients on a wide variety of employment issues, including personnel policies, non-competition/non-solicitation agreements, employee discipline, contract disputes, and alleged retaliation under the False Claims Act, Title VII, the FLSA, and state whistleblower statutes. Christine frequently advises clients on and conducts internal investigations that frequently address employment, ethics, and compliance issues.  Additionally, Christine assists clients with affirmative action compliance, preparing affirmative action plans, analyzing compensation practices, and providing counseling in connection with Office of Federal Contract Compliance Programs audits.

Photo of John Arszulowicz John Arszulowicz

John Arszulowicz is an associate in Crowell & Moring’s Washington, D.C. office and a member of the Tax and International Trade groups. John’s practice focuses on advising clients on tax controversy, tax planning, trade remedies, and import regulatory compliance matters. John also supports…

John Arszulowicz is an associate in Crowell & Moring’s Washington, D.C. office and a member of the Tax and International Trade groups. John’s practice focuses on advising clients on tax controversy, tax planning, trade remedies, and import regulatory compliance matters. John also supports the firm’s Corporate Group on asset-based and real estate loans and loan restructures. In addition, John supports the firm’s U.S. Food and Drug Administration (FDA) matters. John’s experience includes researching and summarizing numerous compliance and liability concerns for the distribution and labeling of FDA-regulated products granted an Emergency Use Authorization or enforcement discretion exception during the nation’s COVID-19 response. Prior to joining Crowell & Moring, John was a credentialed agency official at the FDA, where he completed the FDA’s basic food and drug law course. John was also a summer intern at the U.S. Department of Labor, Office of the Solicitor. During this summer internship, John was involved in a variety of Employee Retirement Income Security Act of 1974 (ERISA) matters. John was selected as a Gary S. Tell ERISA Litigation Scholar.