Chinese graduates 'stole US trade secrets', say prosecutors

Chinese graduates 'stole US trade secrets', say prosecutors

Three Chinese nationals who earned advanced degrees from the University of Southern California and three others have been accused of stealing wireless technology from two American companies.

Federal prosecutors say Hao Zhang, Wei Pang and Huisui Zhang met at the university and conspired to steal from Skyworks Solutions and Avago Technologies soon after graduating in 2006.

Chinese graduates 'stole US trade secrets', say prosecutors

Both companies are publicly-traded chip suppliers for Apple’s iPhones and manufacture other communications-related products.

A 32-page indictment charging the six with economic espionage and trade secret theft was unsealed after Hao Zhang was arrested on Saturday at Los Angeles International Airport after arriving from China to attend a scientific conference. The five others are believed to be in China.

American authorities say foreign governments’ theft of US technology is one of the biggest threats to the country’s economy and national security. They are particularly concerned with China.

State Department spokesman Jeff Rathke said the US government takes “economic espionage” very seriously.

“This case demonstrates that the US is committed to protecting US companies’ trade secrets and their proprietary business information from theft. This is an important issue for the United States,” he told reporters in Washington.

A spokesman at the Chinese embassy in Washington did not immediately respond to a request for comment and the Chinese consulate in San Francisco was unaware of the indictment and declined to comment.

The indictment says that the three USC graduates began plotting in late 2006 to steal trade secrets from the US companies where Hao Zhang and Wei Pang worked.

Months after their 2006 graduation, Wei Pang sent an email to China discussing the trio’s plan to use purloined U.S. trade secrets to set up a factory in China to manufacture technology that eliminates interference from wireless communications, according to the indictment.

Wei Pang boasted in the same email that the technology is worth 1 billion a year in the phone market alone, according to the indictment.

The indictment says the men stole “recipes, source code, specifications, presentations, design layouts and other documents marked as confidential”.

Hao Zhang made a brief court appearance on Monday in Los Angeles and remains in custody.

The USC graduates received encouragement and support from officials at the state-run Tianjin University, according to the indictment.

In 2006, Hao Zhang worked for Skyworks Solutions in Woburn, Massachusetts, and Wei Pang took a job in Fort Collins, Colorado, with Avago Technologies, which has headquarters in San Jose, California, and Singapore.

Wei Pang allegedly sent an email to two other defendants soon after, forwarding notes he took during a work meeting in 2006.

“My work is to make every possible effort to find out about the process’s every possible detail and copy directly to China,” Wei Pang is said to have written.

Hao Zhang and Wei Pang left their US jobs in spring of 2009 to become professors at Tianjin University, a prestigious Chinese college 130 miles south east of Beijing. The men worked with administrators and a graduate student to establish a Chinese company to make the technology.

Avago executives became suspicious of the Tianjin team when they saw Hao Zhang’s patent applications for technology created by the company, according to the indictment.

Richard Ruby, Wei Pang’s former boss at Avago, attended a conference in China in late 2011 and toured the new Tianjin lab created by the defendants, according to the indictment. During that tour, he recognised technology stolen from Avago and confronted Wei Pang and Jingpin Chen, a college dean.

Wei Pang and Jingpin Chen denied stealing any technology, according to the indictment.

Jingpin Chen is also named in the indictment along with Zhao Gang and Chong Zhou. None of the defendants in China could be reached for comment.

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