Nature News, 28 July 2010: Could publishing a scientific article constitute an act of economic espionage? That question lies at the heart of charges against a Massachusetts-based scientist accused of passing US trade secrets to China.
Ke-xue Huang, a Canadian citizen and permanent US resident, was arrested on 13 July, and has been charged under a law designed to protect intellectual property held by US companies. At a bail hearing last week in Massachusetts, the US government claimed that the scientist provided secrets belonging to Dow AgroSciences, based in Indianapolis, Indiana, to the Hunan Normal University in Changsha, China. If convicted of passing the secrets, said to be worth some $100 million, Huang could face up to 15 years in prison for each of 12 counts of economic espionage.
The US Congress passed the Economic Espionage Act in 1996 to counter an apparent rise in foreign spies trading in commercial, rather than military, secrets. Six other cases have been prosecuted under the law, but Huang’s could set a precedent for the law to be applied to industry scientists and academic researchers publishing in the open literature.
This isn’t the first time a scientist has faced prison time for sharing research with China; a physicist at the University of Tennessee, Knoxville, was last year sentenced to four years in prison for violating export control laws. He had provided technical data to scientists in China and worked on sensitive technologies with foreign graduate students. . . . .
. . . . Huang’s problems stem from research related to a review article (K. Huang et al. Appl. Microbiol. Biotechnol. 82, 13–23; 2009). Co-authored with scientists at Hunan Normal University and James Zahn, a researcher at Coskata, a biofuel company in Warrenville, Illinois, the paper describes work on a new class of insecticides that Dow has been making and marketing.
The government alleges that the article contains confidential information — and that publishing it constituted theft of a trade secret, says James Duggan, Huang’s lawyer. At the hearing, however, prosecutors indicated that the article is not the sole basis for the charges, which also involve e-mail communications relating to the research.
Huang worked for Dow from 2003 to 2008, but by the time of his arrest had moved to Qteros, a company based in Marlborough, Massachusetts, that works on biofuels.
Originally from China, Huang had studied biology at China’s Jilin Agricultural University, and earned a PhD in Japan. After a two-year postdoctoral stint in the mid-1990s at Texas A&M University in College Station, where he worked on sequencing biosynthetic genes for vitamin B12 production, he went to Rice University in Houston, Texas. . . .
Infoworld, 27 July 2010: Is your company’s data under surveillance by foreign spybots looking for any competitive advantages or weaknesses they can exploit? This might sound farfetched, but such electronic espionage is real. It’s an insidious security threat that’s a lot more common than you probably realize. . . . .
. . . .Security experts believe that a growing number of companies are being spied upon electronically by sources from other countries, most notably China. What makes these attacks so troublesome is that their techniques are often undetectable by the usual security tools. Electronic spies try to get into systems without causing disruptions, so they can quietly gather information over a period of time.
These types of threats are much harder to deal with than untargeted attacks because they never become widespread enough for security vendors to observe reliably. As a result, security software and other tools that detect known attacks don’t identify these threats. Also, an attack that’s aimed at a particular target can be designed to get around whatever combination of defenses is in place. And the people who launch electronic spying attacks go to great lengths to prevent the targets from detecting the threat.
Although the problem is largely hidden, it is real and serious. In this special report, InfoWorld.com answers the key questions on who’s spying, what they’re looking for, and what you can do to protect yourself. . . . .
Market Watch, press release, 26 July 2010: . . . Cyber crime generally refers to criminal activity conducted via the Internet. The attacks can include stealing an organization’s intellectual property, confiscating online bank accounts, creating and distributing viruses on other computers, posting confidential business information on the Internet and disrupting a country’s critical national infrastructure.
According to the study, which involved interviews with the data protection and IT security practitioners in 45 US organizations, cyber crime is common, intrusive, and can have a significant impact on an organization’s bottom line. Over a four-week period, the 45 organizations surveyed in the study experienced 50 successful attacks per week, or more than one successful attack per organization per week. This resulted in a median annualized cost of $3.8 million per organization per year, with costs for the complete benchmark sample ranging from $1 million to nearly $52 million. . . .
. . . . Additional key findings of the study include:
– The most costly cyber crimes are those caused by web attacks, malicious code and malicious insiders, which account for more than 90% of all cyber crime costs per organization on an annual basis.
– Cyber attacks can be costly if not resolved quickly. In the sample, malicious insider attacks took up to 42 days or more to resolve, with the average cost to an organization of nearly $18,000 per day. . . . .
FBI, 22 July 2010: A federal Indictment was unsealed today in Detroit charging two individuals with conspiracy to possess trade secrets without authorization, unauthorized possession of trade secrets, and wire fraud. One of the individuals was also charged with obstruction of justice, announced Barbara McQuade, United States Attorney for the Eastern District of Michigan. McQuade was joined in the announcement by Andrew G. Arena, Special Agent in Charge of the FBI.
Charged in the seven-count indictment are Yu Qin, aka Yu Chin, 49, and his wife, Shanshan Du, aka Shannon Du, 51, of Troy, Michigan.
According to the indictment, from December 2003 and continuing through May 2006, the defendants conspired to possess trade secret information of General Motors Company relating to hybrid vehicles, knowing that the information had been stolen, converted, or obtained without authorization. The indictment alleges that Du, while employed with GM, provided GM trade secret information relating to hybrid vehicles to her husband, Qin, for his benefit and for the benefit of a company, Millennium Technology International Inc. (MTI), that the defendants owned and operated.
Approximately five days after Du was offered a severance agreement by GM in January 2005, she copied thousands of GM documents, including trade secret documents, to an external computer hard drive used for MTI business. A few months later, Qin moved forward on a new business venture to provide hybrid vehicle technology to Chery Automobile, a Chinese automotive manufacturer based in China and a competitor of GM. The indictment further alleges that in May 2006, the defendants possessed GM trade secret information without authorization on several computer and electronic devices located in their residence.
The indictment also charges that on May 23, 2006, the defendants drove to a dumpster behind a grocery store where defendant Qin discarded plastic bags containing shredded documents responsive to federal grand jury subpoenas seeking information relating to MTI and hybrid vehicles.
GM has been involved in the development and production of hybrid vehicles for over a decade and has invested many millions of dollars in the research and development of hybrid vehicles. Based on preliminary calculations, GM estimates that the value of the stolen GM documents is over $40 million.
U.S. Attorney McQuade said, “As our auto industry works to find new areas of innovation, such as hybrid technology, we will not tolerate the theft of our trade secrets from foreign competitors,” McQuade said. “ We will aggressively prosecute people who steal from the investment that our auto industry has made in research and development.”
Special Agent in Charge Arena said, “Michigan, as well as the rest of the United States, is significantly impacted by the auto industry. Theft of trade secrets is a threat to national security and investigating allegations involving theft of trade secrets is a priority for the FBI. The FBI will continue to aggressively pursue allegations involving the theft of trade secrets.”
The defendants will be appearing in federal court this afternoon at 1 p.m. for arraignment.
The conspiracy to possess trade secrets without authorization count and each of the counts charging unauthorized possession of trade secrets carry a maximum penalty of 10 years’ imprisonment and a $250,000 fine. The wire fraud counts each carry a maximum penalty of 20 years’ imprisonment and a $250,000 fine. The obstruction of justice count carries a maximum penalty of 20 years’ imprisonment and a $250,000 fine.
An Indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The indictment is the result of an investigation by the Federal Bureau of Investigation. This case is being prosecuted by Assistant U.S. Attorney Cathleen Corken.
AP, 23 July 2010: A former General Motors engineer and her husband conspired to steal trade secrets about hybrid technology and use the information to make private deals with Chinese competitors, according to a federal indictment unsealed Thursday.
Shanshan Du and Yu Qin, both of Troy, were indicted on conspiracy, fraud and other charges. They had been under scrutiny for years and were charged in 2006 with destroying documents sought by investigators, a case that was dropped while a broader probe was pursued.
The indictment says Du, who was hired at GM in 2000, purposely sought a transfer in 2003 to get access to hybrid technology and began copying documents by the end of that year. In 2005, she copied thousands of documents, five days after getting a severance offer from the automaker, according to the indictment.
By that summer, Qin was telling people he had a deal to provide hybrid technology to Chery Automobile, a GM competitor in China, the indictment says. The couple had set up their own company, Millennium Technology International. . . . .
. . . . . Corken said GM learned about the alleged theft and called the FBI. GM estimates the value of the stolen information at $40 million. . . . .
Couple accused in GM tech theft (Detroit Free Press, 23 July 2010)
A Troy couple was arraigned in federal court Thursday on charges of conspiring to steal GM’s hybrid vehicle secrets to sell to a Chinese car company. . . . .After GM offered Du a buyout in January 2005, she copied thousands of pages of GM documents to a Millennium Technology external computer hard drive, prosecutors said. Afterward, Qin moved forward with a venture to provide hybrid technology to Chery Automobile, a GM competitor in China, prosecutors said.
In May 2006, the couple drove to a Dumpster behind a grocery store where Qin tossed plastic bags containing shredded documents that a federal grand jury had subpoenaed, authorities said.
They said the stolen documents, valued at more than $40 million by GM, never fell into Chinese hands. The couple are Chinese immigrants and naturalized U.S. citizens, authorities said. . . .
TWO CHARGED IN CONSPIRACY TO STEAL GM TRADE SECRETS (DOJ, 22 July 2010)
♦ CI CENTRE COURSE: 170–Economic Espionage and Theft of Technology
