U.S. officials announced the arrest of a Chinese professor and the indictment of 5 other Chinese citizens this Tuesday.
Officials from the Obama administration claimed that the accused were part of a long-term scheme which aimed to steal microelectronics designs from tech companies. Last year five members of China’s People’s Liberation Army were indicted by the U.S. for their role in hacking computer systems in order to steal technology, write David E. Sanger and Nicole Perlroth for The New York Times.
Ongoing struggle against Chinese economic espionage
The previous five indictments did not see any of the accused appear in an American court, but the approach is said to be the best way to “raise the price” for the Chinese, according to John P. Carlin, chief of the national security division of the Justice Department.
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Arresting and indicting Chinese nationals is sure to raise tensions with Beijing once again. Professor Hao Zhand of Tianjin University was arrested on Saturday at Los Angeles International Airport as he arrived to participate in a conference. It would appear that he is still in custody.
The six men have been indicted for “conspiracy to commit economic espionage,” which is a fairly uncommon charge. Prosecutors claim that the men studied in the U.S. before starting work at Avago Technologies and Skyworks Solutions, two small American chip companies.
Versatile technology replicated and sold in China
According to the indictment, the men worked to steal trade secrets related to a kind of chip known as a “filter,” which has various uses including acoustics in cellphones. Thin-film bulk acoustic resonator (FBAR) technology improves the security of communications on mobile devices, and could have military applications.
It is alleged that the men took the technology before setting up a joint venture company with Tianjin University in order to produce the chips, which were then sold to the Chinese armed forces and commercial customers.
“Sensitive technology developed by U.S. companies in Silicon Valley and throughout California continues to be vulnerable to coordinated and complex efforts sponsored by foreign governments to steal that technology,” said Melinda Haag, the United States attorney in San Francisco.
Long-running plot to take technology back to China
Two of the men then started applying for patents on the technology in the U.S., a process which began as early as 2010. Mr. Hao, and another professor called Wei Pang, were trying “to justify their hiring as full professors” at Tianjin by “having patent applications in their names in both the United States” and at home in China.
Email evidence of the plot is included in the indictment. “Please try not to check personal email account in company,” reads one message from Mr. Wei to Mr. Hao and another defendant, Huisui Zhang. “It could be tracked as long as in company’s network. It is very important. Even in Avago, I have seen several law cases” that led to investigations.
Other emails talk of plans to “form a company and establish a factory in China” which would produce filter chips. The plans began in 2006, one year before the release of the iPhone and the subsequent explosion in smartphone sales. The emails run from 2006 to 2013 and one is even said to include a “stolen Avago design kit.”
Strained relations between major powers
Relations between the U.S. and China have become strained of late, largely due to territorial disputes in the South China Sea, China’s increased investment in nuclear weapons and missile programs, and cybercrime. Although this latest case does not seem to involve hacking, insider theft of industrial secrets is of huge importance.
Efforts by the Obama administration to combat China’s economic espionage have see mixed results. Investigations began in earnest 2 years ago, after cyber attacks from China started to feature prominently in the media.
The FBI reported a 60% increase in trade secret investigations between 2009 and 2013, but prosecuting those involved has been difficult. It is hard to determine the identity of a hacker, and the arrest of Chinese citizens is difficult due to jurisdictional limits.
Limited success has arisen from simpler investigations involving Chinese citizens sending intellectual property from their U.S. employers to state-owned companies in China. The first federal jury conviction on economic espionage charges was made last year, involving two Americans who sold DuPont trade secrets to China.
However no charges have been brought against the two Chinese citizens who were instrumental in the theft of the secrets, nor against the Chinese state-owned company that benefited from them.
It remains to be seen whether prosecutors will manage to convict the 6 Chinese citizens involved in this latest case.