For the first time, a United States federal court has held that a civil action for private damages under the Defend Trade Secrets Act (“DTSA”) can arise from acts of misappropriation that occur completely outside the United States – as long as they have a nexus with some activities within the U.S. In Motorola Sols., Inc. v. Hytera Commc’ns Corp., Ltd., No. 1:17-cv-1973 (N.D. Ill. Mar. 6, 2020) (an earlier decision in this case was previously discussed on this blog here), Motorola alleged that Hytera Communications, a Chinese company, hired away three engineers who then took with them Motorola trade secrets, including thousands of Motorola’s confidential technical documents containing millions of lines of source code and other highly confidential information.

Continue Reading After Motorola Verdict, DTSA Has Extraterritorial Application

On February 13, 2020 the United States filed a sixteen-count superseding indictment against Huawei Technologies Co., Ltd. and several U.S. based subsidiaries (collectively “Huawei”) charging Huawei with racketeering, money laundering, and violating U.S. sanctions against Iran. The new charges, announced by the United States Attorney’s Office for the Eastern District of New York, the Justice Department’s Criminal and National Security divisions, and the FBI, are the latest of a number of enforcement actions by the U.S. Government against Huawei, and yet another escalation in the U.S. Government’s quest to prevent Huawei from stealing trade secrets and other sensitive intellectual property from American companies.
Continue Reading New Charges Leveled Against Huawei, et al.

The United States has long struggled with intellectual property (IP) theft facilitated or condoned by the Chinese government. Just in the past year, a CNBC CFO survey reports that one in five North American corporations have had their IP stolen by China, and just below one-third of CFOs of North American-based companies on the CNBC Global CFO Council state that Chinese firms have stolen from them during the last decade. This IP theft is very costly. In fact, some sources estimate that the annual cost that international IP theft imposes on the United States exceeds $225 billion in counterfeit goods and could be as elevated as $600 billion.

Chinese entities have been alleged to steal IP from foreign companies using methods such as trading with or forming joint ventures with the companies and then gaining access to their sensitive or proprietary information. Businesses have also willingly allowed Chinese partners to access this information in exchange for accessing China’s immense market. Some examples of alleged Chinese IP theft include a conspiracy to hack into U.S. defense contractors’ computer networks to steal sensitive military data and the fact that the Chinese military has infrastructure that can look suspiciously similar to that used by the United States. In the context of urging NATO allies to ban Chinese 5G equipment, Defense Secretary Mark Esper warned at the Department of Homeland Security’s National Cybersecurity Summit last September that China is committing “the greatest intellectual property theft in human history.”
Continue Reading Is Chinese IP Theft Coming to an End?

Chinese national and materials scientist Hongjin Tan has pled guilty to stealing from his former employer Phillips 66 (“Phillips”) more than $1 billion in trade secrets related to next generation battery technology.

DOJ announced Tan’s guilty plea this week which revealed that he copied substantial research and development files that he knew contained protected company

The United States District Court for the Northern District of Illinois recently unsealed a December 13, 2017 indictment of Chinese national, Xudong “William” Yao, who was charged with nine counts of trade secret theft. The charges stem from Yao’s theft of more than 3,000 files between September 2014 and February 2015, including trade secret information such as source code and technical specifications, from an unnamed suburban Chicago locomotive manufacturer. The stolen documents generally pertain to the Illinois manufacturer’s train control systems. According to the indictment, Yao began downloading files just two weeks after beginning his employment with the Illinois company and continued to download files while simultaneously negotiating for and accepting a job with a Chinese “provider of automotive telematics service systems.” He began working for the Chinese company several months after being fired from the Illinois company for reasons unrelated to the theft of documents, and Yao’s employer did not discover the theft until sometime later.
Continue Reading Criminal Prosecution of Chinese Trade Secret Misappropriation

A recent International Trade Commission (ITC) case shows that, although rarely used, the ITC remains a viable option for parties pursuing trade secret misappropriation claims. Trade secret claims can be brought under Section 337(a)(1)(A)’s catch-all for other “unfair methods of competition and unfair acts in the importation of articles”—often called “non-statutory” claims—and can result in

Huawei Technologies Co., the world’s largest telecommunications company, and CNEX Labs Inc. went to trial this week in the U.S. District Court for the Eastern District of Texas over dueling allegations of trade secret theft relating to semiconductor chip technology behind solid-state drives. Huawei Technologies Co. Ltd. et al v. Huang et al, No.

On Wednesday, May 15th, President Trump declared a national emergency via executive order over threats against American technology. The order authorized Department of Commerce Secretary Wilbur Ross, in consultation with various other agency heads to block transactions involving information or communications technology posing an “unacceptable risk to the national security of the United States.”

The

On April 23rd, 2019, China’s Standing Committee on the National People’s Congress adopted amendments to the Anti-Unfair Competition Law, significantly strengthening China’s protection of trade secrets. The bolstering of intellectual property safeguards in China comes in advance of important trade negotiations between China and the international community, including the United States. The changes to the

On April 18, the U.S. District Court for the Northern District of New York unsealed an indictment accusing Zheng Xiaoqing, a former senior engineer for steam turbine design at GE, and Zhang Zhaoxi, a Chinese national, of conspiring to steal GE’s design data and models, engineering drawings, material specifications, configuration files, and other proprietary trade