Stealing for China - two charged in theft of trade secret information

Matthew Lane • Feb 16, 2019 at 7:30 AM

GREENEVILLE — A Chinese national and a Michigan resident have been indicted on federal theft and wire fraud charges in connection with the theft of nearly $120 million worth of trade secrets from Eastman Chemical Company and other companies.

Xiaorong You, a/k/a Shannon You, 56, of Lansing, Michigan, and Liu Xiangchen, 61, of Shandong Province, China, were indicted by a federal grand jury in U.S. District Court in Greeneville on Tuesday.

The indictment charges the pair with eight counts of conspiracy to commit theft of trade secret information related to formulations for bisphenol-A-free (BPA-free) coatings. You was also indicted on seven counts of theft of trade secrets and one count of wire fraud.

The trade secrets allegedly stolen belonged to multiple owners and cost an estimated $119.6 million to develop, according to a press release from the U.S. Attorney’s Office.

What is bisphenol-A?

Until recently, bisphenol-A (BPA) was used to coat the inside of cans and other food and beverage containers to help minimize flavor loss and prevent the container from corroding or reacting with the food or beverage contained within.

However, due to the potential for BPA to be harmful to human health, companies began searching for BPA-free alternatives.

Background information

According to federal prosecutors, from December 2012 through August 2017, You was employed as principal engineer for global research by an Atlanta company that had agreements with numerous companies to conduct research and development, testing, analysis, and review of various BPA-free technologies.

Due to her extensive education and experience with these coating technologies, You was one of a limited number of employees with access to the trade secret information.

Court records state that from September 2017 through June 2018, You was employed as a packaging application development manager for Eastman, where she was one of a limited number of employees with access to trade secret information.

The indictment alleges that You, Xiangchen, and a third co-conspirator crafted a plan whereby You would exploit her employment with the two American firms to steal trade secret information and provide it to other people, including a Chinese company that would manufacture and profit from products developed using the stolen information.

Comments from officials

“Not only can theft of this information be potentially devastating to our American companies; it could also pose a threat to our overall national and economic security,” said J. Douglas Overbey, U.S. attorney for the Eastern District of Tennessee.

“The conduct alleged in (the) indictment exemplifies the rob, replicate and replace approach to technological development,” said Assistant Attorney General John Demers. “Xiaorong You is accused of an egregious, premeditated theft and transfer of trade secrets worth more than $100 million for the purpose of setting up a Chinese company that would compete with the American companies from which the trade secrets were stolen.”