US strategy on ‘economic espionage’ catalogues Chinese IP theft

A new White House strategy document on ‘economic espionage’ outlines a number of recent intellectual property convictions, most of which involve China.

Cases described in the paper include the following:

  • In September 2012, a former engineer at network service provide Level 3 Communications was convicted of stealing thousands of commercially and militarily sensitive documents from his employer. Sixing Liu presented the contents of the documents at various conferences in his native China in order to “position himself for future employment”, the document says.
  • Also in September 2012, a programmer at US trading exchange operator CME Group admitted stealing source code from the Globex electronic trading platform. He and two associates were planning to use the software on a chemical trading platform in China.

  • In August last year, a former engineer at mobile device maker Motorola stole trade secrets relating to the company’s iDEN mobile networking system. Hanjuan Jin was found to have stolen more than 1,000 proprietary technical documents from her employer. According to the evidence given in trial, Jin had previously worked for the Chinese military.

  • In 2010, a former product engineer at Ford Motor Company pleaded guilty to stealing 4,000 technical documents from the car maker after accepting a new job at the Chinese arm of a US company.

  • And in the same year, a Chinese-born engineer at Boeing stole was sentenced to three years imprisonment for stealing trade secrets. “According to the judge’s
    ruling, Chung served as an illegal agent of China for more than 30 years and kept more than 300,000 pages of documents reflecting Boeing trade secrets stashed in his home”.

Out of 20 cases presented in the document, 17 involved Chinese nationals working in the US.

The White House strategy document claims that “the pace of economic espionage and trade secret theft against U.S. cor­porations is accelerating”.

“Foreign competitors of U.S. corporations, some with ties to foreign govern­ments, have increased their efforts to steal trade secret information through the recruitment of current
or former employees,” it says. “Additionally, there are indications that U.S. companies, law firms, academia, and financial institutions are experiencing cyber intrusion activity against electronic repositories containing trade secret information.”

The document recommends various courses of action to crack down on international economic espionage. These are:

  • focusing diplomatic efforts on protecting trade secrets
  • promoting best practice to help business protect their IP
  • improving US law
  • promoting public awareness

Unveiling the report yesterday, US attorney general Eric Holder made specific reference of the cyber security component of economic espionage.

“A hacker in China can acquire source code from a software company in Virginia without leaving his or her desk,” he said. “With a few keystrokes, a terminated or simply unhappy employee of a defense contractor can misappropriate designs, processes, and formulas worth billions of dollars.”

Holder added that “proliferation of mobile devices and cloud-based computing would “create more access points and vulnerabilities that allow criminals to steal confidential information”.

The ‘economic espionage’ accusations against China, which have to date been mainly based on circumstantial evidence, are becoming more explicit.

Earlier this week, a report from cyber security consultancy Mandiant claimed that a secret unit of the Chinese army was responsible for cyber attacks on 141 business in the last seven years.

Ed Reeves

Ed Reeves co-founded Moneypenny with his sister Rachel Clacher in 2000. The company handles more than 9 million calls a year for 7,000 UK businesses and employs almost 400 members of staff. Reeves remains...

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