Recent Trade Secret Cases

Kentucky Man Convicted of Theft of Trade Secrets Sentenced in Yakima Federal Court 

. . . . Ward was arrested on November 11, 2011, in Floyds Knobs, Indiana, following his transfer of a digital copy of an unmanned aircraft vehicle (UAV) maintenance manual to an undercover agent for $10,000.

The manual pertained to a proprietary product of Insitu, Inc., located in Bingen, Washington. Insitu is a wholly owned subsidiary of The Boeing Company and employs approximately 800 people in the development of unmanned aircraft systems (UAS).

During 2010, Insitu contracted with the United States Navy to develop a UAS, now known as the RQ-21A Blackjack. Ward was hired as a technical publications writer in August 2011 to develop an aircraft maintenance manual for the UAV.

After termination of employment approximately two months later, Ward disclosed to a former supervisor that he had taken substantial amounts of proprietary data while working at the company. A one month undercover operation resulted in Ward’s agreeing to exchange the data for $400,000 in currency and benefits. The transaction preceding Ward’s arrest was a down payment for the return of additional proprietary data. During the operation, Ward also e-mailed the cover page of the manual to foreign entities in Kuwait to gauge their interest in the information.  . . .

Walter Liew Sentenced to 15 Years in Prison for Economic Espionage 

Walter Lian-Heen Liew (aka Liu Yuanxuan) was sentenced to serve 15 years in prison, forfeit $27.8 million in illegal profits, and pay $511,667.82 in restitution for what the sentencing judge described as a “white collar crime spree” that included violations of the Economic Espionage Act, tax evasion, bankruptcy fraud, and obstruction of justice . . . . 

The jury found that Liew, his company, USA Performance Technology, Inc. (USAPTI), and Robert Maegerle conspired to steal trade secrets from E.I. du Pont de Nemours & Company regarding their chloride-route titanium dioxide production technology and sold those secrets for large sums of money to state-owned companies of the People’s Republic of China (PRC).

The purpose of their conspiracy was to help those companies develop large-scale chloride-route titanium dioxide production capabilities in the PRC, including a planned 100,000-ton titanium dioxide factory in Chongqing. This case marks the first federal jury conviction on charges brought under the Economic Espionage Act of 1996. . . . 

. . . . Evidence at trial showed that in the early 1990s, Liew met with the government of the PRC and was informed that the PRC had prioritized the development of chloride-route titanium dioxide (TiO2) technology. TiO2 is a commercially valuable white pigment with numerous uses, including coloring paint, plastics, and paper. DuPont’s TiO2 chloride-route process also produces titanium tetrachloride, a material with military and aerospace uses.

Liew was aware that DuPont had developed industry leading TiO2 technology over many years of research and development and assembled a team of former DuPont employees, including Robert Maegerle, to assist him in his efforts to convey DuPont’s TiO2 technology to entities in the PRC. Liew executed contracts with state-owned entities of the PRC for chloride-route TiO2 projects that relied on the transfer of illegally obtained DuPont technology. Liew, Maegerle, and USAPTI obtained and sold DuPont’s TiO2 trade secrets to the Pangang Group companies for more than $20 million. . . . 

Toray Chemical Korea Resolves Attempted Theft of Trade Secrets Investigation and Agrees to Pay More Than $2 Million Penalty 

. . . . From January 2011 through November 2011, Woongjin Chemical sought to improve its Arawin product by hiring and attempting to hire as consultants former DuPont employees with knowledge of Nomex technology, in particular the process for manufacturing Nomex paper.

To that end, two former DuPont employees met with Woongjin Chemical executives in South Korea. During this visit, Woongjin Chemical engineers repeatedly asked the former DuPont employees to disclose aspects of the Nomex manufacturing process, including details about the short-cut fiber, known as floc, used to make Nomex paper.

One of the former DuPont employees offered to confirm the specific length and conditions used to produce floc by speaking with a current DuPont employee when he returned to the United States. Although the former DuPont employee did not obtain the information Woongjin Chemical requested when he returned to the United States, the company continued to seek information about DuPont’s process for manufacturing Nomex paper.

Indeed, a Woongjin Chemical executive directed another employee to obtain a sample of Nomex floc from a DuPont distributor or customer by legal or illegal means. Shortly thereafter, Woongjin Chemical executives learned that FBI agents interviewed the two former DuPont employees regarding the potential theft of DuPont trade secrets. . . .

Threats are Out There