The Long Arm of China’s Security Services
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American businesses lose an estimated $160 billion to $480 billion annually due to trade secret misappropriation. To combat this loss, over the past few years the law enforcement community has enhanced its strategies, Congress has passed legislation to expand trade secret protection, and many businesses have made sweeping changes to their security procedures. To further aid businesses in their efforts to protect their most valuable secrets, my assessment identifies offender trends by analyzing 22 trade secret theft criminal cases decided between 2010-2016.
Most of the trade secret offenders reviewed were middle-aged Chinese males with advanced degrees in engineering, working in the manufacturing industry.
The fact that most of the offenders were Chinese is not surprising because China is the leading threat when it comes to the theft of intellectual assets, including inventions, patents, and R&D secrets, according to the Federal Bureau of Investigation.
Among the cases reviewed, most of the trade secret offenders acted alone and were seeking financial gain, often by selling these secrets to Chinese companies or by using them to seek profits for their own competing companies.
The amount the offenders were paid for the trade secrets varied, but on the high side, Walter Liew was paid $28 million from 2006 to 2011 for contracts to design a titanium dioxide plant for Pangang Titanium Industry Co. in China. Liew recruited sources from DuPont to acquire the trade secrets.
In improving their security procedures, U..S companies—particularly large manufacturing companies—should consider enhancing their trade secret access controls, conducting periodic employee reinvestigations, and reviewing their termination procedures.
One of the challenges prosecutors faced in the cases reviewed was demonstrating that the information stolen was protected, classified, or marked in some way to ensure the user knew they were handling confidential company information, suggesting companies should do more in this area.
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