A new indictment alleging misappropriation of U.S. oil and gas trade secrets by a Chinese energy company, its U.S.-based affiliate, and an executive is another example in a recent string of prosecutions for trade secrets theft involving China, a topic that we have covered on the blog here.

On October 29, 2020, the DOJ announced that a federal grand jury indicted Jason Energy Technologies Co. (“JET”) in Yantai, China, Jason Oil and Gas Equipment LLC (“JOG”) USA in Houston, Texas, and Chinese national Lei Gao (also known as Jason Gao) on charges of conspiracy, trade secret theft, and attempted trade secret theft of technologies from an unnamed Houston-area oil and gas manufacturer.  A former employee of JOG, Robert Erford Jr., previously pleaded guilty to conspiracy to commit trade secret theft.

In November 2019, according to the indictment, Gao and Erford met at JOG’s offices, and JET’s general manager invited Erford to travel to China to assist JET in developing a particular coiled tubing technology.  Erford allegedly agreed to sign a consulting agreement with a confidentiality provision to assist JET in developing this technology and would be paid $1,000 per day for a 15 day trip to China.  Soon thereafter, the indictment asserts, Erford used an encrypted messaging application to transmit an unnamed victim company’s manufacturing information to JET.  The indictment also alleges that Erford met with both Gao and JET officials at JET’s China offices and facilities, where they discussed coiled tubing technology, including proprietary technology, practices, and procedures belonging to the victim company.

The corporate entities face fines of up to $5 million or three times the value of the stolen trade secrets, whichever is greater.  Gao faces the same potential fine, and a prison sentence of up to 10 years. A warrant remains outstanding for Gao’s arrest, and he is believed to be in China.

Tags: China, misappropriation, trade secret misappropriation, trade secret theft
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Photo of Jillian Ambrose Jillian Ambrose

Jillian Ambrose is a Labor & Employment Group associate in Crowell & Moring’s Washington, D.C. office. Prior to joining the firm, Jillian served as a law clerk to Judge Anthony Epstein and then to Judge Steven M. Wellner, both of the D.C. Superior…

Jillian Ambrose is a Labor & Employment Group associate in Crowell & Moring’s Washington, D.C. office. Prior to joining the firm, Jillian served as a law clerk to Judge Anthony Epstein and then to Judge Steven M. Wellner, both of the D.C. Superior Court. Before law school, Jillian was an analyst in the human capital practice of an international consulting firm, where she provided management consulting services to a portfolio of federal agency clients.

Jillian’s practice focuses on litigation of individual and class actions arising in all areas of labor and employment law. She provides counseling to clients on a variety of employment issues, including non-competition/non-solicitation agreements and contract disputes. She also 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. Jillian has substantial experience in representing employers in wage & hour litigation and in conducting audits and compliance review of employer wage & hour policies and procedures.

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Photo of Caroline Brown Caroline Brown

Caroline E. Brown is a partner in Crowell & Moring’s Washington, D.C. office and a member of the firm’s White Collar & Regulatory Enforcement and International Trade groups and the steering committee of the firm’s National Security Practice. She provides strategic advice to…

Caroline E. Brown is a partner in Crowell & Moring’s Washington, D.C. office and a member of the firm’s White Collar & Regulatory Enforcement and International Trade groups and the steering committee of the firm’s National Security Practice. She provides strategic advice to clients on national security matters, including anti-money laundering (AML) and economic sanctions compliance and enforcement challenges, investigations, and cross border transactions, including review by the Committee on Foreign Investment in the United States (CFIUS) and the Committee on Foreign Investment in the U.S. Telecommunications Services Sector (Team Telecom).

Caroline brings over a decade of experience as a national security attorney at the U.S. Departments of Justice and the Treasury. At the U.S. Department of Justice’s National Security Division, she worked on counterespionage, cybersecurity, and counterterrorism matters and investigations, and gained unique insight into issues surrounding data privacy and cybersecurity. In that role, she also sat on both CFIUS and Team Telecom and made recommendations to DOJ senior leadership regarding whether to mitigate, block, or allow transactions under review by those interagency committees. She also negotiated, drafted, and reviewed mitigation agreements, monitored companies’ compliance with those agreements, and coordinated and supervised investigations of breaches of those agreements.

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