Industrial espionage, Part 7: More cases

* More cases of industrial espionage

In the previous article of this series, which is based on the annual reports of the National Counterintelligence Center (later called the Office of the National Counterintelligence Executive), I began a review of some interesting specific cases of industrial espionage from these government reports and others. This article concludes the case reports.

In 1997, John Fulton, a former employee of Joy Mining Machinery, a global coal-mining company, approached a Joy employee in an attempt to purchase schematics for part of the company’s proprietary equipment. The Joy employee reported the attempt and worked with the FBI and his employer to record conversations in which Fulton offered to pay any amount of money for information pertaining to the specific equipment. Fulton paid the cooperating witness $1,500 for blueprints and a technical binder, both of which were Joy proprietary items.

Fulton was arrested by the FBI after the exchange and was charged with unlawfully attempting to obtain trade secrets. Fulton pled guilty to one count of theft of trade secrets and was sentenced in September 1998.

In January 1998, Steven Louis Davis pled guilty to federal charges that he stole and disclosed trade secrets concerning a new shaving system developed by Gillette. Davis was employed by Wright Industries, a subcontractor of Gillette that had been hired to assist in the development of the new shaving system.

The previous year, Davis had made disclosures of technical drawings to Gillette competitors Warner-Lambert Co., Bic and American Safety Razor Co. The disclosures were made by fax and e-mail. Although the FBI is aware that Davis reached out to one foreign-owned company (Bic), it is unclear if he was successful in disseminating trade secrets overseas. Davis was arrested and indicted on counts of wire fraud and theft of trade secrets. Davis was sentenced to two years and three months in federal prison.

In 2001, Junsheng Wang of Bell Imaging Technologies pled guilty to stealing trade secrets from Acuson Corp. The Counterintelligence News and Developments (CIND) report noted:

"In pleading guilty, Wang admitted that prior to August 24, 2000, that he took without authorization and copied for Bell Imaging a document providing the architecture for the Sequoia ultrasound machine that contained the trade secrets of Acuson Corporation. According to Wang's plea agreement, he had been able to obtain access to the Acuson trade secret materials because his wife was employed as an engineer at that company and because she had brought that document into their home. After he had copied the document, he took it with him on business trips to the People's Republic of China, turning it over to Bell Imaging during 2000.”

In May 2001, NewsScan reported:

“Federal authorities arrested two Lucent scientists and a third man described as their business partner on May 4, charging them with stealing source code for software associated with Lucent's PathStar Access Server and sharing it with Datang Telecom Technology Co., a Beijing firm majority-owned by the Chinese government. The software is considered a ‘crown jewel’ of the company. Chinese nationals Hai Lin and Kai Xu were regarded as ‘distinguished members’ of Lucent's staff up until their arrests. The motivation for the theft, according to court documents, was to build a networking powerhouse akin to the ‘Cisco of China.’ The men faced charges of conspiracy to commit wire fraud, punishable by a maximum five years in prison and a $250,000 fine.”

About a year later, in April 2002, NewsScan reported the accused were also charged with stealing secrets from four companies in addition to Lucent: Telenetworks, NetPlane Systems, Hughes Software Systems and Ziatech. The two, working with Yong-Qing Cheng, were “thought to have developed a joint venture with the Datang Telecom Technology Company of Beijing to sell a clone of Lucent's Path Star data and voice transmission system to Internet providers in China.” Kai Xu and Yong-Qing Cheng signed a plea agreement admitting guilt, but Hai Lin fled prosecution.

In April 2003, the U.S. Attorney’s Office for the Northern District of California announced that a citizen of Singapore had pled guilty to theft of trade secrets. He admitted that in early 2002, while working for a language translation company, he delivered a laptop computer and a hard drive that contained trade secrets and confidential proprietary information to a competitor.

In July 2004, an Indian software engineer employed by a U.S. company’s software development center in India was accused of “zipping up” proprietary software source code for printing identification cards and uploading it to her personal e-mail account.

In the next article in this series, I examine a recent case of industrial espionage directed at the United States that involved hackers from the People’s Republic of China.


Copyright © 2005 IDG Communications, Inc.

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