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.